Fed’s Latest Announcement Boosts Copper, Other Industrial Metals
Copper prices are on the rise, along with other popular industrial metals, following the Fed announcing its plans to stick with low interest
Copper prices are on the rise, along with other popular industrial metals, following the Fed announcing its plans to stick with low interest rates and monetary easing for a longer time despite upgrading US economic growth projections. At the time of writing, COPPER is trading at around $4.10.
The US central bank stated that it would continue to hold interest rates low through 2023 even as it expected the US economy to undergo a V-shaped recovery this year. While the multiple round of fiscal stimulus, along wit the Fed’s monetary easing and the COVID-19 vaccine rollout would help the US economy rebound faster than expected, employment and inflation could take longer to normalize.
The decision to remain dovish even as the US economy looks poised for a speedier recovery has driven weakness in the US dollar, which in turn has propped up the appeal of copper and other metals in global markets. This is because a weaker dollar makes commodities more affordable for holders of other currencies to purchase.
Besides, the optimism about more rapid economic recovery has also raised hopes that commodities could register an improvement in demand sooner than previously anticipated. The overall risk-on sentiment in global markets is also contributing to the recent bullishness seen in copper prices.
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