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Copper drops, gold near 1-month high

Copper futures

Copper futures fell 0.1% to $3,5970 a pound, extending losses into a second straight session

Copper prices fell further on Tuesday after major importer China reiterated its commitment to COVID-19 lockdowns, while gold prices held near a one-month high as the dollar retreated on expectations of smaller rate hikes from the Federal Reserve.

Chinese authorities dismissed recent speculation that the country will withdraw its economically damaging zero-COVID policy, as the country grapples with its worst outbreak since May. But this also points to continued economic disruptions in the country, which has dented its appetite for commodities.

Copper futures fell 0.1% to $3,5970 a pound by 00:28 GMT, extending losses into a second straight session. Prices of the red metal have fallen sharply this year on concerns that slowing economic growth will stymie demand in industrial uses.

Copper and several other industrial metals rallied sharply last week on hopes of a China reopening. But comments from Beijing may see them reverse those gains in the coming days.

Still, weakness in the dollar helped limit losses in metal prices, as investors positioned for a smaller rate hike by the Federal Reserve in December. The greenback fell 0.6% on Tuesday, extending losses into a third straight session.

The dollar slipped to a near two-week low on Monday. Focus this week is on U.S. CPI inflation data due on Thursday for more cues on how the world’s largest economy is handling price pressures.

Gold took the most support from a weaker dollar, with prices sticking close to their highest level since mid-October. The prospect of smaller rate hikes offers much relief to gold investors, as rising interest rates dragged bullion prices off their annual highs by increasing the opportunity cost of holding gold.

Spot gold was steady near $1,674.24 an ounce after logging strong gains last week, while gold futures fell 0.2% to $1,677.05 an ounce.

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