Copper prices ticked up overnight, driven by a weaker US dollar and expectations of a global demand recovery, but uncertainty about consumption in top consumer China capped gains.

Benchmark copper on the London Metal exchange traded up 0.1 per cent at $US6,421 a tonne at 1556 GMT.

Prices of the metal, which is used as a gauge of economic health by investors, are up nearly 50 per cent since hitting four-year lows in March when markets tried to price in the demand impact of COVID-19 lockdowns.

Citi analyst Oliver Nugent said the market needed evidence of physical demand.

“Speculative money buying derivatives betting on a copper demand recovery has been able to influence the price. Copper has been trading like a forward-looking asset, like an equity,” he said.

Markets will scrutinise surveys of purchasing managers at manufacturing companies around the globe, due later this week and early next week, for clues to future demand.

The US dollar’s trade-weighted index against a basket of currencies has fallen around 9 per cent since March 20.

A weaker US currency makes dollar-denominated metals cheaper for holders of other currencies, which could boost demand. This is a relationship used by funds to generate buy and sell signals from numerical models.

Escalating tensions between the United States and China are expected to depress sentiment.

The premium for the cash over the 3-month copper contract has narrowed. But at $US7 a tonne, it still suggests concern about supplies on the LME market where stocks are at 7-month lows .

Large holdings of copper warrants and nearby contracts have further fuelled that worry.

Copper faces upside resistance at $US6,655, a Fibonacci retracement level of the slide from June 2018 to March this year.

Aluminium rose 0.6 per cent to $US1,710 a tonne, zinc gained 0.7 per cent to $US2,235, lead added 2 per cent to $US1,855, tin was up 2 per cent to $US18,010 and nickel climbed 0.5 per cent to $US13,725.