Copper drifts higher on rally in tech stocks and weaker dollar

London's copper prices rose for the third consecutive day on Tuesday, propelled by a surge in stock markets, a weaker dollar, and forecasts of robust demand. The benchmark three-month copper on the London Metal Exchange increased by 0.1% to $14,420 per metric ton in official open-outcry trading, after a 1.1% gain on Monday. Commodity strategist Ewa Manthey of ING noted that copper is benefiting from the positive sentiment in equity markets, as the rally in tech stocks fuels optimism about future demand from data centers and power infrastructure.

European and Asian stocks surged on Tuesday following a tech-driven rally that propelled the Nasdaq to a record close. Anticipated growth in the AI and defense sectors is projected to increase copper demand by 50% by 2040. Copper prices reached a record high last month, climbing 16% this year, but have since eased from a high of $14,875, which was set on September 10.

Over the past three sessions, copper has found support at the 50-day moving average of $14,253. The Shanghai Futures Exchange was closed for China's National Day holiday and will reopen on October 8, with traders closely monitoring the return of Chinese buyers. Manthey added that with Chinese markets closed, trading is thinner than usual, and the gains may need to hold when activity resumes.

The weaker dollar index is also aiding industrial metals, making dollar-denominated commodities cheaper for buyers using other currencies. LME aluminum rose 0.7% to $3,148 per ton, while prices for construction, packaging, and transport metal fell by more than 17% since June's four-year high. Zinc climbed 0.6% to $3,765 per ton, lead added 0.1% to $1,878, and tin rose 0.1% to $54,390, with nickel declining by 0.1% to $15,700.