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Copper slides as longs flee and dollar firms

October 29, 2022 00:00:00

LONDON, Oct 28 (Reuters): Copper drifted lower on Friday as bullish investors shed long positions while the dollar strengthened and top metals consumer China reported more coronavirus cases and renewed lockdowns.

Three-month copper CMCU3 on the London Metal Exchange (LME) declined 1.9% to $7,617 a tonne by 1025 GMT after touching the highest in nearly three weeks on Wednesday.

"The longs are getting out after being sucked into a false break higher earlier in the week and now the market is waiting for a clear sign of where we're heading next," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

LME copper was finding support at the 21-day moving average around $7,580, a break below which would be likely to send prices down to $7,350, he said.

"The outlook for recovery in China continues to be postponed, so it extends the period of demand uncertainty," Hansen added.

China on Friday reported a rise in COVID-19 infections while cities from Wuhan in central China to Xining in the northwest have been ramping up COVID-19 curbs.

"We have seen COVID-zero policies drowning out positivity from the onshore equities market," Marex analyst Zenon Ho said in a note.

The most-traded December copper contract on the Shanghai Futures Exchange SCFcv1 fell 1% to 62,830 yuan ($8,672.07) a tonne.

Also weighing on the market was a firmer dollar =USD, which makes metals priced in the U.S. currency more expensive for buyers using other currencies.

LME lead CMPB3 bucked the trend on Friday, jumping 4.3% to $1,946 a tonne after the Bloomberg Commodity Index announced it would add the metal in 2023.

In other metals, LME aluminium CMAL3 fell 1% to $2,264.50 a tonne, nickel CMNI3 edged down 0.1% to $22,370, zinc CMZN3 shed 1.8% to $2,888.50 and tin CMSN3 dropped 2.1% to $18,295.

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