Metals-Copper drifts lower ahead of Fed rate decision
XLB•Copper eases as markets await Fed decision
SINGAPORE, July 29 (Reuters) - Copper ticked down on Wednesday, contending with demand worries and a strong dollar ahead of the conclusion of the U.S. Federal Reserve's meeting.
Benchmark three-month copper CMCU3 on the London Metal Exchange slipped 0.28% to $13,647 a metric ton by 0300 GMT. The most-traded copper contract on the Shanghai Futures Exchange SCFcv1 was 0.21% lower at 104,830 yuan ($15,480.83) a ton.
The Fed is due to conclude its two-day policy meeting on Wednesday, where it is expected to keep rates steady, though market pricing of a rate increase has risen in the last week. Interest rate traders are pricing in a 70% chance that rates will remain unchanged and a 76% chance of an increase in September, according to the CME's FedWatch tool.
"Investors [in copper] remained concerned about tighter monetary policy," Daniel Hynes, senior commodity strategist at ANZ, said in a note.
High interest rates could weigh on demand expectations for growth-dependent commodities like copper by restraining economic activity.
Rate expectations have also supported the dollar =USD, making commodities denominated in the greenback more expensive for buyers using other currencies.
Elsewhere, stumbling AI stocks have hit expectations of demand for copper.
"Sentiment has also been weighed down by the selloff in AI-related stocks," Hynes said.
Shares in Asian chipmakers, which were among the big winners of this year's AI-driven rally, have been battered this week amid worries about valuations ahead of crucial earnings from big tech firms.
Copper had been boosted by projections around the AI infrastructure buildout, for which it is an essential commodity.
Among other LME metals, aluminium CMAL3 added 0.43%, zinc CMZN3 dipped 0.06%, lead CMPB3 dipped 0.26%, nickel CMNI3 gained 0.77% and tin CMSN3 gained 1.3%.
