Copper Edges Up as Inventories Fall, Dollar Rally Pauses

By David Hodari

LONDON--Copper prices edged higher Friday, building on Thursday's gains as inventories continued to fall and the dollar's recent rally stalled.

The base metal was up 0.16% at $6,928 a metric ton in late morning trade.

Gold, meanwhile, rose 0.25% to $1,324.53 a troy ounce, heading for its first weekly gain in the past month.

The U.S. dollar's resurgence was put on pause by Thursday's U.S. consumer-price index data, which undershot market expectations in April. That in turn lowered expectations for a stepped-up interest-rate increase schedule.

The WSJ Dollar Index, which measures the currency against a basket of 16 others, was last down 0.1% and flat on the week. After a month in which the index gained 2.8%, investors in dollar-denominated commodities were taking advantage of the break in the dollar's climb.

"The dollar's really behind a lot of commodities moves at the moment," said Geordie Wilkes, analyst at Sucden Financial Research.

Copper prices also benefited from another slip in London Metal Exchange inventories on Thursday, with stocks having been drawn down by almost 17% since the start of May, according to ING analysts in a note.

The majority of that drawdown came in Asia, where Chinese demand appeared to be belatedly picking up after an unexpected lull after the country's Lunar New Year celebrations in mid-February, the ING analysts said.

Chinese economic data will likely continue to influence trading decisions next week, with industrial production data due out on Tuesday.

Elsewhere in base metals, aluminum was down 1% at $2,288 a metric ton, extending its losses for the week to 2.5% after soaring to a six-year high amid threats last month of disruption to supply from the world's number two aluminum company, United Co. Rusal.

Recent weeks have been characterized by sharp volatility in the aluminum market and that may continue for some time, given that the U.S. Treasury Department reprieve on Oleg Deripaska, who controls Rusal, expires next month.

The company removed forecasts from its quarterly earnings report, released Friday.

Among precious metals, silver was up 0.42% at $16.78 a troy ounce, platinum was up 0.27% at $928 a troy ounce and palladium was up 0.36% at $1,005.50 a troy ounce.

Among base metals, zinc was up 0.49% at $3,097 a metric ton, nickel was up 0.58% at $13,930 a metric ton, tin was down 0.19% at $20,760 a metric ton and lead was up 2% at $2,347 a metric ton.

Write to David Hodari at [email protected]