By Ese Erheriene
LONDON–Copper futures closed higher on the London Metal Exchange on Wednesday as the dollar flatlined.
The LME’s three-month copper contract closed up 0.4% at $6,145 a metric ton at the PM kerb close, hitting a seven-day high earlier in the session at $6,145 a ton.
“The recovery in the copper price this afternoon is a dollar story,” said Stephen Briggs, metals strategist at BNP Paribas.
The dollar was down against a basket of currencies, including the euro (down 1.7%) and sterling (down 0.9%), which are significant moves for deep and liquid currency markets. The dollar balloon was punctured by disappointing U.S. first-quarter GDP data. The figure weighed in at 0.2%, well below market expectations of 1.1%.
Given that the red metal is a dollar-denominated commodity, prices tick higher when the greenback softens. This is because the metal becomes cheaper to purchase for those holding other currencies, which helps demand to pick up.
Most of the other base metals received a shot in the arm from the weaker dollar: aluminium closed up 0.5% at $1,883 a ton; zinc closed up 0.1% at $2,297/ton; nickel closed down 0.2% at $13,420/ton; lead closed up 0.4% at $2,088/ton and tin closed down 3.1% at $15,750/ton.