Copper, zinc fall as strong dollar weighs on industrial metals

Business Recorder reported that copper and zinc fell on Wednesday as a stronger dollar and fears that rates would stay elevated for an extended period weighed on industrial metals. The three-month LME copper contract slipped 0.99% to $14,133.5 a metric ton by 0300 GMT, while on the Shanghai Futures Exchange the most actively traded copper contract dropped 1.65% to 107,710 yuan ($16,022.55) a ton. Zinc also declined, with LME zinc down 1.43% and SHFE zinc off 1.8%.

A firmer greenback, extending overnight gains, came as fresh fighting in the Middle East lifted oil and revived inflation concerns. Commodities priced in dollars become costlier for buyers holding other currencies, which tends to dampen demand. US factory activity softened in August while input costs remained elevated, adding to doubts about demand.

Traders now put a 68% probability on a Federal Reserve rate increase at its September meeting, compared with 40% a week before, according to the CME FedWatch tool. Remarks from Chair Kevin Warsh last Friday, which leaned toward tightening, further fed those bets. Higher borrowing costs tend to restrain economic activity and therefore metal demand.