Copper prices climbed on Thursday, snapping a two-day losing streak, as the Federal Reserve's decision to hold interest rates steady weakened the dollar and exacerbated already tight supply conditions outside the United States. Main Developments Benchmark three-month copper on the London Metal Exchange rose 1.2% to $13,747.50 per metric ton by 0932 GMT. The dollar dropped to a one-week low after the Fed voted to keep rates unchanged on Wednesday, making greenback-denominated metals cheaper for international buyers. Market expectations for a September rate hike fell to 58%, down from 81% before the policy statement, according to the CME Group's FedWatch tool. A softer dollar typically boosts demand for commodities priced in the currency. Read also: Why Palm Oil Prices Are Rising Despite Cautious Traders LME copper inventories fell by 6,900 tons to 255,400 tons—the lowest since February. That left the cash contract at a premium of more than $30 a ton over the three-month forward, signaling tight near-term supply. Background Copper, widely used in power, construction, and manufacturing, has been supported by dwindling global inventories and persistent demand from China. Shanghai Futures Exchange copper stocks stand at less than 70,000 tons, the lowest since February 2024. A contrasting dynamic has emerged in the United States. COMEX copper stocks reached a record 644,465 metric tons—nearly double the combined inventories of the LME and ShFE—as metal continues flowing to the U.S. ahead of possible import tariffs. Backwardation—a market structure where prompt-delivery prices exceed those for future delivery—also appeared in aluminum and zinc spreads, with inventories of those metals running thin. LME three-month aluminum edged up 0.1% to $3,183 per ton, while zinc rose 0.4% to $3,582 and tin added 0.7% to $54,145. Lead and nickel were flat at $1,900 and $17,135, respectively. Why It Matters The combination of a weaker dollar and shrinking inventories outside the U.S. points to sustained upward pressure on copper prices, which affects costs for industries from construction to electronics manufacturing. Diverging inventory levels between U.S. and non-U.S. exchanges could create regional pricing disparities and supply bottlenecks. What's Next Traders will watch for further Fed signals on interest rates, as any shift in rate-cut expectations could reverse the dollar's decline. Inventory data from LME, ShFE, and COMEX will remain critical for gauging supply tightness, particularly in China where stocks are near multi-year lows.