Copper drifts as interest rate fears weigh on demand expectations

Copper slipped on Thursday after hotter-than-expected US economic data raised concerns that interest rates could stay high for longer and weigh on metal demand, according to Business Recorder. On the London Metal Exchange, the three-month contract lost 0.22 per cent to $14,586.5 a metric ton by 0317 GMT, while the most actively traded Shanghai Futures Exchange contract dropped 0.52 per cent to 110,750 yuan ($16,494.89) a ton.

Analysts at Galaxy Futures said US business activity expanded to its strongest level in more than five years in September, which pushed rate expectations higher. Traders in rate markets now price a 72 per cent chance that the Federal Reserve will lift rates again at its October meeting, compared with 49 per cent a week earlier, based on the CME FedWatch tool.

Elsewhere, oil edged down after Tehran signalled a willingness to pursue diplomacy, offsetting an Iranian official's Wednesday comment that the two sides remained distant on a peace deal with Washington. The conflict has lifted energy prices and inflation, adding to worries about prolonged high rates that can curb economic growth and demand for growth-linked commodities. Earlier in the week, copper had gained from Chinese purchases before national holidays, but a stronger dollar and profit-taking pulled it away from levels near record highs.