(Bloomberg) -- Copper and other base metals pared earlier gains after underlying US inflation unexpectedly picked up in August, undercutting the chances of an outsize Federal Reserve interest-rate cut next week.
The core consumer price index — which excludes food and energy costs and is a preferred gauge for economists — increased 0.3% from July, the most in four months, and 3.2% from a year ago, Bureau of Labor Statistics figures showed Wednesday.
While the data is unlikely to deter the Federal Reserve from cutting interest rates next week, it makes an outsized reduction —— a 50 basis point cut —— less likely than a 25 basis point reduction. Treasury yields pushed higher while the dollar pared early losses after the print, and bullion edged lower.
As investors awaited the data earlier today, there were across-the-board gains on the London Metal Exchange, with copper reaching a high of $9,151 a ton. Copper has been edging higher since sinking below $9,000 a ton earlier this month, with traders weighing some signs of a pick-up in Chinese demand against concerns over global growth, uncertainties around monetary policy and the looming US presidential election.
Markets were also digesting the outcome of the first debate between US presidential candidates, Kamala Harris and Donald Trump, with the odds of victory for the former rising after the match-up. Citigroup Inc. has argued that Trump’s threat of tougher tariffs will weigh on metals before the November vote.
Copper traded 0.6% higher at $9,079 a ton by 3:01 p.m in London, while aluminum was up 1.3% and tin added 1.1%.
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