Copper slips from six-month high as US inflation data looms

Copper prices edged lower on Wednesday, giving up earlier gains that had pushed the metal to its highest level in six months. The pullback came as investors turned cautious ahead of key US inflation data, with broader economic concerns tempering optimism in the industrial metals complex.

Benchmark three-month copper on the London Metal Exchange slipped 0.09% to $14,336.50 per metric ton by 0716 GMT, after touching $14,437 earlier in the session — the highest since January 29. On the Shanghai Futures Exchange, the most-traded copper contract rose 0.55% to 108,750 yuan ($16,182.55) per ton.

The metal, often called "Dr Copper" for its reputation as a barometer of economic health, was restrained as markets awaited the release of the US Personal Consumption Expenditures (PCE) price index for July, due at 1230 GMT. The data is expected to set the tone ahead of Federal Reserve Chairman Kevin Warsh's keynote speech at Jackson Hole on Friday.

Lower oil prices, as US-Iran tensions shifted from military confrontation to economic pressure, did little to boost economic sentiment or support growth-dependent metals, though they did help restrain interest rates. High interest rates can weigh on demand for industrial metals by slowing economic activity. According to the CME's Fedwatch tool, there is now a 36% chance the Fed will raise rates at its September meeting, down from 41% a day earlier.

These pressures offset price support from waning LME inventories, as non-traditional copper participants including hedge funds and other speculative investors trade on inventory data showing falling warehouse stocks. "There are a lot of non-traditional sources trading copper, and an awful amount of fast money moving on data releases," said David Wilson, head of metals strategy at BNP Paribas.

Among other LME metals, aluminium lost 0.45%, zinc ticked 0.09% higher, lead dipped 0.24%, nickel lost 0.42%, and tin shed 0.38%. On the SHFE, aluminium dipped 0.17%, zinc gained 0.71%, lead added 0.22%, nickel dipped 0.32%, and tin dipped 0.29%.