Copper prices retreated from a two-month high overnight as worries about the economic damage from the COVID-19 pandemic offset optimism over a potential vaccine.
Financial markets rallied on Monday after positive data in a preliminary safety trial of a new vaccine from US company Moderna.
But investors on Tuesday also had to confront data showing US homebuilding dropped by the most on record in April and British jobless claims climbed to their highest level in 24 years.
“It’s a reality check setting in after yesterday’s strong surge,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“We may have an alternative vaccine, but we’re probably 12-18 months from it hitting our medicine cabinets. In the meantime, dreadful economic data is still coming from around the world.”
Three-month copper on the London Metal Exchange (LME) was up 0.7 per cent at $US5,354.50 a tonne by 1600 GMT, paring gains after touching $US5,377.50, its highest since March 16.
Copper, which gained 2.6 per cent on Monday, has rebounded 22 per cent since touching a 45-month low on March 19.
“The $US5,350 level is key and remains quite a challenge for LME copper at this stage,” Hansen said. “Until we get some more solid news about growth, then the upside seems to be driven more by hope than by reality.”
Most base metals prices are set to drift lower over the coming months as activity slows in top metals consumer China, Citi said in a note.
“China is about to enter a seasonally weak demand period for construction and consumer appliance output, where construction demand falls 10 per cent and air conditioner output 30 per cent.”
Prices of metals were supported by market expectations that China could announce more stimulus measures this week.
LME aluminium shed 0.6 per cent to $US1,487 a tonne after touching $US1,502, the strongest since April 30, while zinc added 0.4 per cent to $US2,031.50 after hitting $US2,038, the highest since March 13.
Lead rose 0.9 per cent to $US1,679, nickel climbed 1.6 per cent to $US12,445 and tin gained 0.7 per cent to $US15,385.