Copper price eases as traders weigh Fed’s next move

Copper eased with some Asian markets offline for the Lunar New Year holiday and traders focused on the Federal Reserve’s next move on interest rates.

Minutes of the Fed’s January meeting released Wednesday indicated that policymakers were surprisingly wary of cutting rates, causing a slight reduction of bets on monetary loosening this year. This weighed on the demand outlook for metals in early trading.

Renewed US-Iran risks also weighed on demand for risky assets including metals. President Donald Trump said the US has to “make a meaningful deal” with Iran while adding that the next 10 days will tell whether there will be an accord. Iran is a “hot spot” right now even as officials from both sides engage in “good talks,” Trump said. He also noted his son-in-law Jared Kushner will be an “envoy of peace.”

The US military is stationing a vast array of forces in the Middle East, including two aircraft carriers, fighter jets and refueling tankers, giving Trump the option for a major attack against Iran as he pressures the country to strike a deal over its nuclear program.

Copper is consolidating after a two-month surge, driven by a wave of speculative buying that took it to a record high at the end of January. Economic data published since the Fed’s last meeting have pointed to accelerating growth, slowing inflation and a stabilizing job market. Trump has continued to call for lower interest rates.

High prices for the red metal have crimped demand in the physical market. As a result, metal is building up in warehouses linked to multiple exchanges around the world. Data released Thursday showed readily-available inventories of copper in warehouses tracked by the London Metal Exchange have risen for the 27th straight day, the longest streak since 2009.

Copper fell 0.8% to settle at $12,809 a ton on the London Metal Exchange. All other industrial metals except nickel declined.

(By Eddie Spence and Jack Ryan)