LONDON - Copper prices hit a six-week high on Thursday as bets the US Federal Reserve will ease the pace of interest rate rises pushed up riskier assets and weakened the dollar, making dollar-priced metals cheaper for buyers with other currencies.
US data on Wednesday suggested inflation may be peaking, reducing the need for rate increases that would stifle economic activity and metals demand.
The data bolstered faith among investors that rebounds in stocks and bonds will persist, though Fed policymakers said they would continue to tighten policy until price pressures are fully broken.
Benchmark copper CMCU3 on the London Metal Exchange (LME) was up 0.8% at $8 151.50 a tonne at 09:40 GMT after reaching $8 189, the highest since July 1.
Prices of the metal used in power and construction are up 17% from a low in mid-July. but still down 25% from a peak in March due to slowing economic growth and demand.
"The peak inflation thesis is pushing base metals up," said Gianclaudio Torlizzi, partner at consultants T-Commodity.
He said signs of tight supply in China were also lifting copper. "The physical indicators are pretty bullish. I think the price will continue to move up," he said.
Stockpiles of copper in Chinese exchange and bonded warehouses have been falling and import premiums are their highest since December.