Copper Falls to $14,193 Amid Fed Hiking Fears
Copper prices dropped 0.3% to $14,193 per ton after US inflation data intensified bets on Federal Reserve rate hikes. The metal recorded its first weekly decline since June, pressured by a stronger dollar and reduced speculative demand.
Copper futures on the London Metal Exchange declined 0.3% to $14,193 per ton by 10:05 am Singapore time. The metal fell as much as 0.6% during the session, marking its first weekly loss since June. This movement follows hotter-than-expected US inflation data released on Friday.
Traders increased their bets on the Federal Reserve raising interest rates at its upcoming meeting. Tighter monetary policy typically weighs on non-yielding assets like base metals. A strengthening dollar and broader pressure on risk assets contributed to the decline across major metal contracts.
Inflation Data Drives Rate Expectations
Market participants ramped up expectations for a rate hike following the latest inflation print. However, doubts remain regarding potential political pressure on the central bank. The shift in monetary policy outlook directly impacts the cost of holding physical copper, which yields no interest.
The spot premium over three-month futures narrowed significantly in recent weeks. On Monday, the premium stood at $4.50 per ton. This reduction signals that immediate supply tightness is easing. Analysts at Sucden Financial Ltd. noted that speculative length has also decreased, contributing to a choppy trading range.
Broader Metal Market Trends
Zinc futures dropped 0.7% in the same session. Aluminum prices remained flat despite the broader market weakness. Iron ore fell for the fourth consecutive session, dropping 0.4% to $97 per ton. These moves reflect a general retreat in risk assets across commodity markets.
Recent Tariff and Supply Dynamics
Copper reached a record high last week driven by tariff speculation. Traders shipped refined metal to the US to profit from potential domestic price spikes. Optimism over demand from data centers and renewable energy also supported prices. Supply setbacks at key mines added to the bullish momentum before the recent pullback.
Sources include GN auto markets/commodities: copper prices and market reports from CNBC TV18. The current price action suggests a period of consolidation. Prices are likely to remain volatile until a new macroeconomic or fundamental catalyst emerges. Dip-buying has not yet returned to strong levels, keeping upside momentum limited.
