Copper edges higher after China stocks rally 3.5%
Investing.com – Copper prices edged higher on Wednesday, as Chinese markets rallied after the previous sessions' broad selloff and as investors eyed the Federal Reserve's upcoming policy statement.
for September delivery on the Comex division of the New York Mercantile Exchange tacked on 1.3 cents, or 0.53%, to trade at $2.415 a pound during European morning hours.
A day earlier, copper rose 4.9 cents, or 2.08%, to end at $2.402 as investors returned to the market to seek cheap bargains after prices hit a six-year low of $2.336 on Monday.
The took investors on another roller coaster ride on Wednesday, rising more than 1% after the open, only to turn negative after the midday break, and then rise again to end up 3.5%.
Equity markets in China plunged sharply earlier this week, forcing policymakers to intervene and provide measures to boost liquidity and calm investors.
Chinese regulators pledged to buy more shares to stabilize markets, while the country's central bank hinted at more policy easing if needed.
On Monday, the Shanghai Composite tumbled 8.5%, the biggest one-day drop since February 2007, amid reports that government buying of stocks and securities has slowed.
Market players are concerned that the plunge in the stock market could spread to other parts of the Chinese economy, triggering fears that the Asian nation's demand for the industrial metal will decline.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Elsewhere, for December delivery inched up 90 cents, or 0.08%, to trade at $1,097.60 a troy ounce, while for September delivery added 0.8 cents, or 0.05% to trade at $14.65 an ounce.
Fed officials are expected to provide further signals that the central bank could raise rates as soon as September if the economy continues to improve as expected when it releases its rate statement later in the session.
Gold has been under heavy selling pressure in recent months amid speculation the Fed will hikes rates for the first time in nine years this autumn.
Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.
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