Copper prices approach three-month high amid weaker dollar

According to Reuters, copper prices reached their highest level in nearly three months on Thursday, driven by a weakening dollar, concerns over supply stability, and increased activity from speculators following a break of key technical levels. The copper contract on the London Metal Exchange (LME) rose by 1.8% to $9,882 per ton.

Alastair Munro, strategist at Marex, noted that the key driver remains the decline of the greenback. The dollar index fell to its lowest since early 2022 amid concerns about the independence of the Federal Reserve. A cheaper dollar makes commodities priced in it more attractive for buyers using other currencies.

The premium for the cash copper contract on the LME climbed to $240 per ton from $101 on Wednesday, although it decreased from $280 reached on Monday. Chinese market participants have shown increased demand for the metal, with open positions on the Shanghai Futures Exchange rising.

Traders expect that future copper deliveries to LME warehouses will ease supply shortages. However, these forecasts have yet to materialize. According to Munro, market participants are still predominantly holding short positions on July contracts.