Copper edges higher on US-Iran peace deal before Fed policy meeting

Copper edged higher on Wednesday, supported by the U.S.-Iran peace deal, while expectations of a hawkish shift from the Federal Reserve capped gains. The benchmark three-month copper on the London Metal Exchange added 0.30% to $13,816 a metric ton by 0805 GMT. The most-traded copper contract on the Shanghai Futures Exchange gained 0.41% to close daytime trading at 105,400 yuan ($15,598.18) a ton. Details began to emerge on Tuesday of the U.S.-Iran agreement to end the war in the Middle East, under which the U.S. would end its blockade of Iranian ports and Iran would reopen the Strait of Hormuz. Oil prices slid, with Brent futures wiping out much of their gains since the war began, easing concerns over energy-driven inflation and supply disruption, though uncertainty remained over whether another 60-day truce would hold. Israel has distanced itself from both the April ceasefire and the latest U.S.-Iran agreement, adding to the uncertainty. Prime Minister Benjamin Netanyahu said Israel was not bound by the deal and would not withdraw from southern Lebanon. Copper's gains were, however, capped by expectations that the U.S. Federal Reserve would keep borrowing costs higher for longer. The Fed’s new Chair Kevin Warsh faces a difficult first policy meeting, with updated projections due on Wednesday expected to show most policymakers see no rate cuts this year, while a small group supports a rate hike to counter inflation. Higher interest rates typically weigh on metals by strengthening the dollar and reducing demand for growth-sensitive commodities. Elsewhere on the LME, aluminium rose 1.12%, zinc gained 0.52%, lead ticked 0.15% lower, nickel dropped 0.12% and tin gained 0.44%. Among other metals on SHFE, aluminium added 0.21%, zinc dipped 0.22%, lead climbed 1.10%, nickel was little changed, down only 0.01%, and tin lost 0.24%.