Copper prices steadied after the biggest rise in three months in the previous session on investor hopes that Chinese measures to boost lending would be followed by progress in trade talks with the United States.
Prices were also supported by a weaker dollar after Federal Reserve Chairman Jerome Powell hinted that the pace of US interest rate rises could slow.
A weaker dollar makes metals cheaper for buyers using other currencies.
Benchmark copper on the London Metal Exchange closed 0.1 per cent up at $US5,923 a tonne after surging 3.2 per cent on Friday in its biggest one-day gain since September 21.
It rose from a low base, however, having hit an 18-month low of $US5,725 last week.
Copper, aluminium, zinc and nickel fell by between 16 and 26 per cent last year as top consumer China’s metals-hungry economy slowed and a trade dispute with Washington heralded further deceleration.
Prices could fall again if this week’s trade talks fail, said ING analyst Warren Patterson, adding that tight supplies of copper and other industrial metals would lift prices over the course of the year.
‘From here we expect upside across the board,’ he said, predicting that copper would average $US6,400 a tonne in the second quarter and rise towards $US7,000 by the end of 2019.
US and Chinese officials are meeting for the first face-to-face talks since the two countries agreed in December to a 90-day truce in a trade war that investors fear will curb global economic growth.
China said on Monday it had the ‘good faith’ to work with the United States to resolve trade frictions.
US Secretary of State Wilbur Ross said a good settlement was likely on immediate trade issues but an agreement on structural trade issues and enforcement would be harder.
The talks come after China’s central bank on Friday said it was cutting reserve requirements for banks for the fifth time in a year, freeing up $US116 billion for new lending.
German industrial orders fell more than expected in November, adding to a slew of recent indicators showing Germany’s exporters are suffering from the trade dispute between China and the United States.
LME aluminium ended 0.7 per cent up at $US1,878.50 a tonne, zinc finished with a gain of 2.5 per cent at $US2,498, lead rose 0.2 per cent to $US1,953, tin climbed 1 per cent to $US19,750 and nickel, which did not trade at the close, was bid up 0.4 per cent at $US11,150.