Copper gained for a third day as speculation that the Federal Reserve will delay raising interest rates boosted the appeal of metals as a store of value.
Sputtering U.S. economic growth has traders scaling back on wagers that the Fed will start tightening monetary policy by December, according to futures data compiled by Bloomberg. Investors tend to snub commodities when rates rise because the raw materials don’t provide yields, unlike competing assets. The prospect of low rates has also taken the steam out of the dollar’s rally, making metals a more attractive alternative.
“The Fed on hold indefinitely boosts the appeal of all risky assets, and in base metals the place to express that is in copper,” Tai Wong, the director of commodity products trading at BMO Capital Markets Corp. in New York, said in a telephone interview.
Copper for delivery in three months gained 0.2 percent to settle at $5,185 a metric ton ($2.35 a pound) at 5:54 p.m. on the London Metal Exchange, a third straight gain and the longest rally in two weeks.
Prices rose on Monday after Glencore Plc Chief Executive Officer Ivan Glasenberg said the market would begin to tighten. Pan Pacific Copper Co. Ltd., Japan’s biggest producer of the metal, also forecast improved conditions. While Goldman Sachs Group Inc. expects a surplus to extend through at least 2019, Citigroup Inc. says that supply cuts will help copper rebound. The metal has slumped about 18 percent this year amid slowing growth in China, the top consumer.
Copper futures for December delivery slid less than 0.1 percent to $2.355 a pound on the Comex. Also in London, nickel, lead and tin gained, while aluminum and zinc fell. Chinese markets remain shut until Thursday for a national holiday.