- LME lead risks long liquidation if breaks $1,800 -Triland
- Two-day Fed Reserve meeting begins on Tuesday
- Coming up: U.S. Markit flash PMI July at 1345 GMT
(Adds details, quotes; changes dateline from MELBOURNE)
Copper, zinc and nickel touched one-week lows on Tuesday on market uncertainty ahead of the U.S. central bank meeting and as investors sold to book profits from a recent rally.
The U.S. Federal Reserve, which begins its two-day meeting on Tuesday, is expected to keep interest rates unchanged this week, but analysts say some policymakers are likely to argue for a rate hike in the coming months.
"These market worries about the Fed meeting are justified. Our economists think markets have become too complacent about the outlook for U.S. monetary policy," said analyst Carsten Menke at Julius Baer in Zurich.
"After we've seen some positive economic data out of the United States, rate hike expectations could be brought forward, which would support the dollar and in turn weigh on metals prices."
Three-month copper on the London Metal Exchange CMCU3 was down 0.7 percent to $4,867 a tonne by 1017 GMT, the lowest since July 18, extending a 0.4 percent decline from Monday.
Shanghai Futures Exchange copper SCFcv1 fell 1 percent to 37,810 yuan ($5,662) a tonne.
Some investors are also worried that prices will be pressured by rising copper supply, highlighted when Grupo Mexico's April-June data showed copper output surging 22.7 percent to 266,071 tons from the same 2015 period.
LME zinc CMZN3, the best performing metal this year, shed 1 percent to $2,226.50 a tonne after edging up 0.2 percent on Monday and touching a 14-month peak last week of $2,294.50.
Pre-set sell orders were triggered when prices broke below $2,235 for zinc, which has the most bullish investors of the LME complex, said Dee Perera at broker Marex Spectron.
"This is the biggest speculative long seen in zinc since October 2014," she added in a note.
Nickel CMNI3 was the worst LME performer on Tuesday, dropping 1.7 percent to $10,300 after surging by about a fifth since June 1 on signs of tighter supply from the Philippines due to heavy rains and an environmental crackdown on miners.
"Clearly if prices moved so strongly over a short period of time, you're vulnerable to short-term correction if sentiment in the whole complex reverses," Menke said.
LME CMPB3 lead fell 0.5 percent at $1,833.50 a tonne. Triland put $1,800 as the next support to watch, and if that is broken, there could be decent long liquidation.
PRICES
Three month LME copper CMCU3 Most active ShFE copper SCFcv1 Three month LME aluminium CMAL3 Most active ShFE aluminium SAFcv1 Three month LME zinc CMZN3 Most active ShFE zinc SZNcv1 Three month LME lead CMPB3 Most active ShFE lead SPBcv1 Three month LME nickel CMNI3 Most active ShFE nickel SNIcv1 Three month LME tin CMSN3 Most active ShFE tin SSNcv1 ($1 = 6.6780 Chinese yuan)
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