Traders are concerned about a tightening in monetary policy to curb inflation.

 

"There were also concerns about a liquidity squeeze in China as the central bank rolled over medium-term loans with short-term funding costs supported," said Anna Stablum from Marex Spectron's LME desk.

 

"In addition, there was speculation of further measures taken against speculators onshore with ferrous metals also under pressure."

 

Copper dropped 4% or $400.75 to $9537.50 per tonne, the lowest in almost two months.

 

The five London majors, all of which have heavy copper exposure fell, while First Quantum Minerals lost 5.9% in Toronto.

 

Nickel lost 4% or $745.45 to $17,704.50/t, a three-week low.

 

The Federal Reserve meeting also continued to weigh on gold, which dropped to as low as $1853 an ounce, a one-month low.

 

Futures last traded at $1860.90/oz.

 

US stocks fell slightly off all-time highs. ASX futures were down 12 points.

 

Meanwhile, Reuters reports that energy is powering back.

 

Oil prices rose on Monday this week, extending three weeks of gains that have been underpinned by an improved outlook for fuel demand as increased Covid-19 vaccinations help lift travel curbs, along with tightness in supply.

 

Reuters reports that Brent crude was up 33c, or 0.5%, at $73.02 by 0455 GMT. It earlier rose to $73.12, the highest since May 2019, having gained 1.1% last week.

 

US West Texas Intermediate gained 31c, or 0.4%, to stand at $71.22 a barrel, earlier reaching $71.32, the highest since October 2018. The contract rose 1.9% on the week.

 

Motor vehicle traffic is returning to pre-pandemic levels in North America and much of Europe, and more planes are in the air as anti-coronavirus lockdowns and other restrictions are being eased, driving three weeks of increases for the oil benchmarks.

 

"In the short term the oil market may be volatile with frequent pull-backs as crude prices are beginning to struggle as demand in Europe and India faces headwinds," said Avtar Sandu, senior manager commodities at Phillip Futures in Singapore.

 

"The major trend is, however, still intact and deep pullbacks would provide opportunities for buying the dips," he said.

 

The Organisation of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, need to increase output to meet recovering demand, the International Energy Agency (IEA) said in its monthly report.

 

The OPEC+ group has been restraining production to support prices after the pandemic wiped out demand in 2020, maintaining strong compliance with agreed targets in May, Reuters reported.

 

"OPEC+ needs to open the taps to keep the world oil markets adequately supplied," the IEA said.

 

Goldman Sachs said last week it expects Brent to rise to $80 per barrel this summer as the rollout of inoculations boosts economic activity around the world. read more

 

US oil rigs in operation rose by six to 365, the highest since April 2020, energy services company Baker Hughes Co said in its weekly report.

 

It was the biggest weekly increase of oil rigs in a month, as drilling companies sought to benefit from rising demand.