Copper prices climbed to a two-week high Tuesday, buoyed by a sliding U.S. dollar and technical buying, but analysts cautioned the gains may be short-lived as President Trump’s trade tariffs cast a long shadow over industrial metal demand.
Price Action
- LME Copper (CMCU3): Jumped 2.1% to 9,379/ton∗∗,peakingat∗∗9,379/ton∗∗,peakingat∗∗9,388—its highest since April 3.
- Technical Breakout: Prices breached key resistance at the 100-day (9,290)and200−day(9,290)and200−day(9,330) moving averages.
- Other Metals: Aluminum (+1.1%), zinc (+1.1%), and tin (+1.8%) also rose, though volumes were thin.
Drivers of the Rally
- Dollar Dive: Trump’s attack on Fed Chair Powell eroded confidence in the USD, making greenback-priced metals cheaper for foreign buyers.
- Fund Flows: Commodity trading advisers (CTAs) covered short positions, amplifying the move.
- China Stockpiles: Shanghai Futures Exchange inventories plunged 36% since February, tightening near-term supply.
Why It’s Fragile
- Tariff Overhang: Trump’s levies threaten global GDP growth—and thus copper demand—with lagged effects still to hit.
- Demand Doubts: “The tariffs’ impact on consumption won’t be clear for months,” noted Marex’s Edward Meir.
- Technical Ceiling: The 21-day moving average ($9,380) now acts as the next resistance level.
Market Paradox
- Short-Term Tightness: Trade disruptions may be stranding supply, artificially propping up prices.
- Long-Term Risk: Analysts at Citigroup warn copper could slide below $8,500 by Q3 if tariff wars escalate.
What’s Next?
- Fed Watch: Further dollar weakness could extend gains, but $9,500 remains a stiff cap.
- China Demand: Any rebound in construction/EV sectors may offset Western slowdown fears.
- Tariff Triggers: New U.S. levies on Chinese goods (e.g., electronics) would hit copper-intensive manufacturing.
Copper Rides Dollar Weakness to 2-Week High, But Tariff Storm Clouds Loom