Copper Plunges 5.4% on Tariff Stagnation and Fed Hike Fears
Comex copper dropped to $6.5160 per pound after the White House stalled tariff plans. This move triggered a broad sell-off in precious metals and mining equities.
Comex December copper futures fell 5.4% to $6.5160 per pound. The price dropped from a record high of $6.8885 set the previous day. This decline followed reports that the White House has paused its refined copper tariff plan. Officials are weighing the impact on manufacturing costs before the November elections.
The drop in copper dragged down the broader metals market. Gold and silver also fell as the U.S. dollar strengthened. Market expectations for a Federal Reserve rate hike next week rose to approximately 70%. This shift occurred after the release of the U.S. producer price report.
Precious Metals Face Broad Sell Off
December gold contracts fell 1.6% to $4,391.00 per ounce. The metal had previously dropped as much as 2.1% to $4,365.40. Silver underperformed gold significantly in this session. December silver tumbled 5.9% to $64.575 per ounce.
Platinum and palladium both declined by more than 6%. The weakness in these metals correlated with rising U.S. Treasury yields. Swap traders increased the probability of a September rate hike from 60% to 70%. Friday’s consumer price data will be the final major report before the Fed meeting.
Mining Stocks Suffer Heavy Losses
Freeport-McMoRan shares fell more than 7% in New York trading. This drop reduced the company’s market value to $101.7 billion. A further 2% decline would place the company below the $100 billion threshold. Trading volume reached 15 million shares by early afternoon, exceeding the two-week average.
Teck Resources and Southern Copper both fell more than 6%. Southern Copper lost over $10 billion in market value. Diversified miners like BHP and Rio Tinto also faced pressure. BHP dropped 6% while Rio Tinto fell more than 4%.
Market Reaction to Policy Shifts
The copper price drop stemmed from a Reuters report. The report indicated that traders had not secured the expected tariff support. Hedge funds held large long positions in the metal. The correlation between copper and the S&P 500 was at a multi-decade high.
Silver’s 5.5% drop marked its worst single-day performance since June. The metal is now 6% below its closing level after a 20% rise in August. Gold mining stocks showed more resilience. Newmont fell less than 2% while Agnico Eagle slipped nearly 3%.
