LONDON- Copper prices pulled back on Friday after touching their highest in nearly two months after the head of the US Federal Reserve doubled down on more interest rate hikes and warned that it would be painful.
Earlier, copper and aluminum prices had shot up on worries over an energy crisis hitting output while supply is tight and inventories low.
Three-month copper on the London Metal Exchange (LME) gained as much as 2.3 percent to $8,318 a ton, its highest since June 30, before paring gains to $8,163, a rise of 0.4 percent.
Copper prices have rebounded 17 percent since touching 20-month lows on July 15, but are still down 25 percent from a record peak scaled in March.
Prices retreated after Federal Reserve Chair Jerome Powell warned that the US economy will need tight monetary policy “for some time” before inflation is under control, which means slower growth.
“The recession fears are still there in the background,” said WisdomTree commodity strategist Nitesh Shah.
Prices were earlier boosted by concern about soaring power prices, which have hit energy-intensive aluminum and zinc the most, causing smelter cutbacks and boosted costs for metals producers across the board.
“As long as supply is being destroyed by the energy crisis at a faster rate than demand is being destroyed by hawkish policies of central banks, that could really tighten the fundamentals for base metals,” Shah said.
LME benchmark aluminum held most of its earlier gains, trading 2.8 percent firmer at a two-week high of $2,502 a ton.