Copper bounces off 3-month low on dovish Fed, soft dollar

Investing.com - Copper prices bounced off a three-month low on Thursday, as the U.S. dollar weakened after the Federal Reserve lowered both its U.S. growth forecast and its interest-rate projections, prompting investors to push back expectations on the timing of an initial rate hike.

On the Comex division of the New York Mercantile Exchange, copper for July delivery climbed 2.1 cents, or 0.82%, to trade at $2.625 a pound during European morning hours.

A day earlier, copper hit $2.598, a level not seen since March 19, before ending at $2.604, down 1.1 cents, or 0.44%. Futures were likely to find support at $2.595, the low from March 19, and resistance at $2.681, the high from June 15.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.55% at 93.96, the lowest level since May 18.

A weaker dollar boosts demand for raw materials as an alternative investment and makes dollar-priced commodities cheaper for holders of other currencies.

Fed Chair Janet Yellen said Wednesday that the central bank wanted to see “more decisive evidence” of sustained growth before raising rates, but acknowledged that the economy has “expanded moderately” after a weak first quarter.

Market players now looked ahead to the release of key U.S. data later in the session for further indications on the strength of the economy and the future path of monetary policy.

The U.S. is to release a string of data, including reports on consumer prices, initial jobless claims and manufacturing activity in the Philadelphia region.

Elsewhere, gold futures for August delivery rallied $18.90, or 1.61%, to trade at $1,195.90 a troy ounce, while silver futures for July delivery jumped 31.6 cents, or 1.98% to trade at $16.26 an ounce.

Meanwhile, investors continued to monitor developments surrounding talks between Greece and its international creditors, amid growing concerns that the country could default on its debt be forced out of the euro zone.

Europe wants Greece to make spending cuts in order to secure a deal that will unlock €7.2 billion in bailout funds and prevent Athens defaulting on its debts when its bailout expires at the end of the month.

European finance ministers were to hold talks in Brussels later Thursday, but expectations for a deal were not high. Failure to strike a deal would result in Greece defaulting on payments and exiting the euro zone.