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Copper prices fell on Monday as global demand concerns were reinforced by expectations that the US Federal Reserve will hike interest rates aggressively this week.

According to data from Cochilco, in its daily wheel, copper on the London Metal Exchange fell -0.26% to 3.52 dollars per pound.

Higher interest rates in the United States translates into greater strength of the US currency. That makes metals priced in dollars more expensive for holders of other currencies, further weighing on demand.

“Metals are falling due to the dollar and the tightening of monetary policy in the United States,” said a trader, according to what was reported. Reuters. “The energy crisis in Europe could lead to the paralysis of the great industrial activity”.

He added that trading was sparse due to a UK public holiday for Queen Elizabeth’s funeral.

US data last week, which showed an acceleration in inflation, has raised prospects for a 100 basis point rate hike when the Federal Reserve concludes its two-day meeting on Wednesday. Markets have already priced in a 75 basis point rate hike.

EU proposals to impose a mandatory target for countries to reduce energy use this winter to ensure Europe has enough fuel for the colder months may see manufacturers in the region having to cut or cut production.

“Prospects for a possible recession in Europe, coupled with recent weakness in China, have caused speculative positions to decline, driving down copper prices,” Citi analyst Max Layton said in a note.

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Source: www.elmostrador.cl

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J. A. Allen

Author, blogger, freelance writer. Hater of spiders. Drinker of wine. Mother of hellions.

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