(Bloomberg) -- Copper gave up early gains as traders mulled the Federal Reserve’s next steps after private payrolls data added to evidence of a cooling labor market.

US companies scaled back hiring in November, with manufacturers reducing headcount to the lowest level since early 2022, according to the ADP Research Institute in collaboration with Stanford Digital Economy Lab. The weakness in the data bolstered bets the Fed is done raising rates and may start cutting next year. 

Copper slumped earlier this week after rallying since early October on a combination of Chinese stimulus pledges, signs of tighter supply and Fed rate-cut speculation. Swaps markets are now pricing in an almost 60% chance the Fed will lower borrowing costs in March, which would buoy investor demand for commodities.

Recent US jobs data have showed a gradually cooling labor market, which is something Fed officials would like to see as they embark on a tightening cycle to combat inflation. A key focus for both the central bank and traders will be Friday’s non-farm payrolls data. It is forecast to show employers added some 185,000 jobs in November. The unemployment rate is seen holding at the highest level in nearly two years. 

Copper slipped 1.3% to $8,334.50 a metric ton on the London Metal Exchange as of 1:15 p.m. in New York. Other LME metals were mixed, with aluminum dropping while nickel advancing.

--With assistance from Eddie Spence.

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