LONDON - Copper prices on Thursday held on to gains from the previous session as investors bet that slower U.S. interest rate hikes and an easing of China's COVID-19 controls would improve the outlook for demand.
Benchmark copper on the London Metal Exchange (LME) was down 0.1% at $8,233 a tonne, as of 1145 GMT, after leaping 2.5% on Thursday, when U.S. Federal Reserve Chair Jerome Powell said rate increases could slow "as soon as December".
Higher rates stifle economic activity. Stock markets and other risk assets rose and the dollar fell to a three-month low, helping dollar-priced metals by making them cheaper for buyers with other currencies.
China, the biggest metals consumer, is set to announce in coming days a reduction in mass testing, an easing of COVID-19 quarantine protocols, sources told Reuters.
Moves away from its zero-COVID policy come on top of measures by China to support the embattled real estate sector.
Used in construction and power, copper prices fell from a record high of $10,845 in March as low as $9,955 in July before rising somewhat as markets began to anticipate economic recovery.
However, data showed that factory output fell in many parts of the world in November.
Copper's fundamentals remain poor and prices should move towards $7,500 a tonne, said Julius Baer analyst Carsten Menke.
"I don't think any of the policies coming out of China will have a big impact on property or metals demand," he said, adding that slowing urbanisation, deteriorating demographics and weaker growth meant China would not drive metals demand as much as in previous years.
Others are more bullish.
Analysts at Bank of America said that given low stockpiles of metal, a weaker U.S. dollar, a Chinese economic rebound and accelerating use of copper in green technology could push prices to $12,000 next year.
LME aluminium was down 0.1% at $2,474 a tonne, zinc rose 0.7% to $3,057.50, nickel fell 0.1% to $26,960, lead slipped 0.2% to $2,188 and tin was up 0.9% at $23,115.
(Reporting by Peter Hobson; additional reporting by Enrico Dela Cruz in Manila; Editing by Sherry Jacob-Phillips)