LONDON- Copper prices settled for a weekly loss on Friday due to a strong dollar, high inventories and reduced risk appetite after the US Federal Reserve signaled monetary policy would remain restrictive for longer.
Three-month copper on the London Metal Exchange (LME) was up 0.3 percent at $8,219 per metric ton. Its 1.8 percent drop on Thursday was the deepest daily decline since Aug. 1.
The US dollar currency index was on track for its 10th consecutive weekly increase in the wake of the Fed decision, making dollar-priced metals less attractive to holders of other currencies.
“With rates this high now, investors face a dilemma — do they continue to hold no-yielding metal exposure, or switch to some other asset that offers rising returns,” said Tom Price, head of commodities at Liberum.
Adding to the pressure on prices for copper, which is used in the power and construction sectors, inventories in LME-registered warehouses remained at their highest level since May 2022, and data by the ICSG showed that the copper market was in surplus in the January-July period.
The discount for near-term delivery versus the LME three-month copper contract was at a four-month high, indicating plentiful immediate supply.
