Copper hovered near four-month highs hit the previous session on Thursday as investors awaited the outcome of a US Federal Reserve meeting which is expected to include monetary stimulus.
Three-month copper on the London Metal Exchange edged up $4 to $8,100 per tonne by 11:51 SA time, after dipping to a low of $8,050 earlier in the session.
On Wednesday copper surged to a four-month peak of $8,170 after a German court decision gave a green light to ratify the euro zone's new bailout fund.
Since last Friday, copper has broken above the key $7,800 ceiling that had held for months and popped above the $8,000 mark in a burst of optimism over $157 billion in infrastructure spending in top metals consumer China and fresh measures to tackle the euro zone debt crisis.
“At the moment we're pausing here. If you want new investor longs you'll have to wait to see what the Fed does,” said analyst Andrey Kryuchenkov at VTB Capital in London.
“It seems the market is convinced that there will be some kind of indication of further easing. If the market is disappointed, the market will definitely sink below $8,000 on copper and potentially back towards $7,800.”
A Reuters poll showed economists raised their bets for a third round of Fed bond buying known as quantitative easing to 65 percent from 60 percent in August.
The combination of higher prices and a rebound in open interest on the LME in recent sessions shows that investors have been establishing new long positions.
Open interest in copper rose by another 4,664 lots to 248,479, bringing the gain since the start of the month to 13 percent after touching the lowest levels since January 2007.
“Some longs prefer to take profit ahead of the (Fed) meeting since they've already made money on their positions and because there is always a chance that the Fed won't start another round of quantitative easing - even if many people expect it,” said a Shanghai-based trader with an international firm.
Kryuchenkov said after the Fed meeting, the market's focus would return to China, where spot demand has been lacklustre and where its infrastructure programme will take time to filter through to metal purchases.
The most active January copper contract on the Shanghai Futures Exchange closed the session 0.3 percent lower at 58,120 yuan ($9,200) per tonne.
In China's physical copper market, spot cargoes were trading about 180-250 yuan lower than the ShFE prompt September month contract, reflecting sluggish demand from downstream industries.
The ShFE September contract, however, is trading at a premium to forward months. The backwardation, traders said, was not due to tighter spot demand but due to Jinchuan Group, China's third-largest smelter, buying up about 20,000-30,000 tonnes of copper over the past few weeks.
TIN SLIDES
In other metals, three month tin was the biggest mover, sliding 2.0 percent to $20,385 a tonne after further signs of supply resuming from Indonesia.
Indonesia's tin smelters have all resumed operations after a temporary shutdown halved output from the world's top tin exporter last month, the Indonesia Tin Association said.
In zinc, the premium of three-month metal over cash widened to $31 a tonne on Wednesday evening, compared with $25.75 the previous session and about $5 in mid-August.
Three-month zinc was barely changed, up $1.50 at $2,019.50 a tonne.
Aluminium rose 0.2 percent to $2,089.75 a tonne and the Sept-Oct spread remained tight at a backwardation as much as $19 compared to $20 on Wednesday.
Lead rose 0.1 percent to $20,385 a tonne and nickel added 0.7 percent to $16,771. - Reuters