Copper climbs amid attempts to regain footing even as dollar strengthens

Copper prices rose on Thursday even as dollar gained ground as well against most major rivals as investors await debt ceiling negotiations. 

Debt Ceiling 

White House and Congressional officials continue to hold meetings to further negotiate after the failure of the previous talks to reach a compromise on raising the debt ceiling.

US President Joe Biden will extend talks with Congressional leaders later this week in a race to a catastrophic default on debt next week.

Many sticking points remain between both sides, with US Treasury Secretary Janet Yellen reiterating warnings from a potential default on payments next June, which would threaten the credit rating for the US and tip the economy into recession.

In a sign of danger, Fitch Ratings said the US credit rating is under negative review, which might lead to a downgrade. 

Copper: An Economic Barometer 

Copper is used extensively in many sectors, and therefore it's highly sensitive to global events and growth rates, as it's used in almost everything, from homes and factories to electronics and energy production and electric cars. 

Therefore improved demand on copper usually indicates good growth rates, and vice versa. 

Copper witnessed gains in recent years during the pandemic for several reasons: 

First, the record financial stimuli worldwide provided strong tailwind to boost economic growth when closures were lifted, in turn boosting manufacturing. 

Second, a series of disruptions in mining and refining hurt supplies and cut into inventories. 

Third, a weaker dollar during the pandemic boosted copper contracts as they became cheaper to holders of other currencies.

Copper prices hit $4.80 a pound in May 2021, and a reached a peak of over $5 in March 2022. 

However, copper prices slid recently amid tight global financial conditions and concerns about subsequent global recession, with copper down 25% from its March 2022 highs. 

A resurgence in Covid 19 in China also hurt demand, while higher interest rates worldwide also played a role in dragging economic activities down worldwide. 

Otherwise, the dollar index rose 0.35% to 104.1 as of 15:17 GMT, with a session-high at 104.2, and a low at 103.8.

Copper futures due in July rose 0.7% as of 15:11 GMT  to $3.58 a pound.