METALS-Copper slips on strong dollar after hawkish Fed meeting

(Updates prices at 1615 GMT)

By Eric Onstad

LONDON, June 18 (Reuters) - Copper prices lost traction on Thursday, as the dollar strengthened following a hawkish U.S. central bank meeting and due to wariness about the U.S.-Iran peace deal.

Benchmark three-month copper on the London Metal Exchange was down 0.9% at $13,688 a metric ton at 1615 GMT, after it ended with a 0.3% gain in the previous session.

The dollar index hit a one-year peak on Thursday as traders bet on possible rate hikes after new Federal Reserve chair Kevin Warsh highlighted inflation concerns.

The Fed funds futures market is fully pricing in a rate hike by October, according to LSEG data.

A stronger dollar makes greenback-priced commodities more expensive for buyers using other currencies.

"His (Warsh) emphasis on vigilance against price pressures seems to have unwound the optimism that had briefly lifted the complex following progress on the U.S.-Iran peace agreement," said Neil Welsh, head of metals at Britannia Global Markets.

The yield on the two-year bond, which is most sensitive to the market's expectations for rate action, rose to its highest since February 2025.

"Should U.S. bond markets remain unsettled, we could see further downside pressure on metals by virtue of a stronger dollar and rising rates," said analyst Ed Meir at broker Marex.

LME copper touched a one-week high on Monday after U.S. and Iranian officials agreed a framework to end the war. The two nations released the text of the agreement on Wednesday, but U.S. President Donald Trump threatened to resume attacks if Iran failed to honour its commitments.

The most-traded copper contract on the Shanghai Futures Exchange dropped 0.5% to 104,780 yuan ($15,497) a ton, ending a week shortened by China's Dragon Boat Festival holiday from June 19 to 21.

LME zinc outperformed, climbing 1.4% to a two-week high of $3,637 a ton due to falling processing charges on the back of tight concentrate supplies, a trader said.

Among other metals, LME aluminium slipped 0.4% to $3,398.50 a ton, lead added 0.1% to $1,980.50, nickel shed 1.4% to $17,805 and tin slid 3.2% to $53,600.

($1 = 6.7615 Chinese yuan renminbi) (Reporting by Eric Onstad; additional reporting by Tom Daly; Editing by Harikrishnan Nair, Shailesh Kuber and Joyjeet Das)