Copper edges higher despite persistent macro headwinds

Copper prices recovered on Tuesday following a steep fall in the prior session, although a firm dollar, costly oil and doubts over Chinese demand limited the upside. The London Metal Exchange three-month contract gained 0.34% to $14,461.50 per metric ton. Business Recorder also reported that Shanghai's most-traded contract edged up 0.09%, reaching 109,530 yuan ($16,335.08) per ton at 0332 GMT.

LME copper had fallen 1.4% on Monday, dipping to $14,343, a level not seen in over ten days, as weak Chinese industrial profits figures added to the squeeze from higher oil prices and a firmer dollar. Traders are awaiting Chinese purchasing managers readings, set for release later this week, for clues on metals demand. Meanwhile, pre-holiday restocking in China is losing pace ahead of the seven-day National Day break, which begins Thursday, adding to concerns about demand.

Brent crude stayed above $106 a barrel and extended its gains as worries over Middle East supply disruptions lingered. Costlier oil has sharpened inflation worries and fuelled bets that US rates will stay elevated for an extended period. The dollar index stayed close to its highest level in two months as Treasury yields climbed, and traders assigned more than 70% odds to another Federal Reserve rate hike in October. Tighter borrowing costs generally weigh on economic activity and, in turn, copper demand.