Copper prices recover as dollar rally pauses

Investing.com - Copper prices regained strength on Wednesday, one day after falling to a four-week low, as the U.S. dollar paused following a rally on the back of expectations for a U.S. rate hike later this year.

On the Comex division of the New York Mercantile Exchange, copper for July delivery inched up 1.0 cent, or 0.35%, to trade at $2.788 a pound during European morning hours.

A day earlier, copper prices slumped to $2.773, the weakest level since April 29, before settling at $2.778, down 3.3 cents, or 1.17%.

Futures were likely to find support at $2.759, the low from April 29, and resistance at $2.834, the high from May 26.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.3% to 97.10, off the five-week peaks of 97.47 set during the previous session.

The greenback surged on Tuesday after data showed that U.S. business investment plans increased, consumer confidence improved and new home sales jumped.

The upbeat data supported the view that the Federal Reserve could start to raise interest rates later in the year if the economy continues to improve as expected.

Elsewhere, gold futures for August delivery tacked on $1.10, or 0.09%, to trade at $1,188.90 a troy ounce, while silver futures for July delivery advanced 1.7 cents, or 0.1% to trade at $16.76 an ounce.

On Tuesday, gold fell to $1,185.60, the lowest level since May 12, before ending at $1,187.80, down $17.10, or 1.42%, after a batch of upbeat U.S. data bolstered the case for a Fed rate hike this year.

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.

Meanwhile, the threat of an imminent Greek debt default eased after the government expressed confidence that it would make a €305 million payment to the International Monetary Fund due on June 5.

Athens had previously warned that it would be unable to make the repayment if a cash-for-reforms deal with its international lenders was not reached by then.