Due to expectations of interest rate cuts in the U.S. and market anticipation of the results of this week’s presidential election, the dollar weakened, along with potential additional stimulus measures from the Chinese government. As a result, prices for copper, aluminum, and other base metals rose on Monday, November 4.
As of 11:15 AM local time, copper prices on the London Metal Exchange increased by 0.7% to $9,634.50 per ton. Aluminum prices remained relatively stable at $2,598, while tin prices rose by 1.2%. Meanwhile, iron ore futures in Singapore climbed 2.1% to $104.25, recovering from a 1.5% drop on Friday.
Analysts expect the Federal Reserve to cut interest rates by 25 basis points at its meeting on November 6-7, with further cuts anticipated in the coming months. This has put pressure on the dollar. When the dollar weakens, it makes metals priced in dollars cheaper for buyers holding other currencies, thus supporting demand. Traders noted that much of the rise in copper prices on Monday was due to funds trading based on buy and sell signals from quantitative models, with overall market sentiment being positive amid the focus on the U.S. election.
Additionally, the dollar index fell as investors abandoned bets on Donald Trump winning the election, with recent polls indicating a rise in support for Kamala Harris.
Metals and iron ore have also risen, along with the Chinese stock market and the renminbi. According to Chinese state media, the National People’s Congress Standing Committee held a meeting on Monday morning to discuss plans to raise the debt ceiling for local governments to replace hidden debts, a highly anticipated move. Investors are waiting to see if this meeting will release more resources to support economic development.
Last month, however, most base metals declined as initial optimism over China’s efforts to stimulate economic growth shifted to skepticism about the economic outlook.
Fitch Solutions’ BMI has raised its average aluminum price forecast for this year by 2% to $2,450 per ton, citing supply concerns, stimulus measures from China, and anticipated interest rate cuts from the Federal Reserve.
