Copper fell, halting the metal’s longest rally since June, amid concern that U.S. policy makers will raise interest rates, which could spur gains for the dollar and cut the appeal of commodities as alternative assets.
The Federal Open Market Committee may decide to raise interest rates at its Sept. 16-17 meeting, the first such increase since 2008. Copper prices have fallen 15 percent this year amid concerns that slower growth in emerging markets will reduce demand. Tighter U.S. monetary policy could further damp consumption as foreign currencies weaken and make the metal more expensive for overseas buyers. The Bloomberg Dollar Spot Index traded little changed on Friday.
“The market is nervous about what impact” the Fed meeting will have, Tim Evans, the chief market strategist at Long Leaf Trading Group Inc. in Chicago, said in a telephone interview. It’s a “classic risk-off environment," he said.
Copper for delivery in three months sank 0.5 percent to settle at $5,370 a metric ton ($2.43 a pound) on the London Metal Exchange.
Thirty-eight of 78 economists surveyed by Bloomberg predict the central bank will tighten monetary policy when officials gather next week. The benchmark rate has been close to zero for seven years to support the economy.
“If you have to buy or sell something and you’re uncertain, you’re going to sell it,” Evans said. “It takes confidence to buy.”
Prices climbed in the previous four sessions, rising 5.4 percent on concern that supplies would tighten as miners including Glencore Plc took steps to cut production.
Also on the LME, nickel, lead and zinc fell, while aluminum and tin climbed. On the Comex in New York, copper futures for December delivery added 0.3 percent to $2.4535 a pound.