Copper ticks up as Fed rate hike bets cool

Copper prices rose on Monday as hopes for a US Federal Reserve interest rate hike in October diminished. Benchmark three-month copper on the London Metal Exchange climbed 0.19% to $14,286 per metric ton. This gain came as investors reassessed the likelihood of a rate hike following weak US jobs data last week, which lowered expectations that the central bank would raise rates to control inflation. The CME's FedWatch tool now shows an 18% chance of a rate hike at the Fed's upcoming meeting, down from 64% a week prior.

Higher interest rates can negatively impact commodities tied to economic growth, such as copper. Meanwhile, the US dollar surged to a near 17-month high due to a weak euro. The dollar index, which gauges the currency's strength against six major currencies, increased by 0.53%. A stronger dollar tends to drive up the prices of commodities denominated in US dollars, as they become more expensive for buyers using other currencies.

Copper also received support from falling oil prices. Higher energy costs have contributed to inflationary pressures and put downward pressure on copper prices. Additionally, increased Middle East crude exports and a release of oil stocks by the Group of Seven nations boosted oil supplies, further supporting copper prices.

Aluminum also declined on Monday, falling 0.19% to $3,091.5 per ton, its lowest level in over three months. The decrease was driven by stronger dollar pressures and concerns about potential new production capacity in Indonesia. Other metals, including zinc, lead, nickel, and tin, experienced mixed performances. Zinc dropped 0.44%, lead added 0.3%, nickel remained relatively stable with a 0.01% decline, and tin gained 0.24%. The Shanghai Futures Exchange, which was closed for China's National Day, will reopen on October 8.