Copper Prices Continue Downward Trend Amid Accelerating Inflation and Strengthening US Dollar

Copper Retreats from Record-High Close as Inflation and Stronger Dollar Weigh

Copper extended its retreat from a record-high close, falling around 3% from the close of Wednesday. The industrial metal's decline follows an eight-day run of gains driven by mine disruptions and a rally in technology stocks, which fueled optimism that the artificial intelligence boom would spur demand for copper. The metal is used in wiring and renewable energy.

The US dollar continued its upward trend, jumping 1% this week. Wholesale and consumer inflation readings in the US surged to multiyear highs, while the continued effective closure of the Strait of Hormuz pushed up energy prices, resulting in more hawkish monetary policy around the world. Metals fell due to the stronger dollar and higher US Treasury yields, pointing to fading expectations for rate cuts.

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In China, the world's biggest metals consumer, copper prices near record highs have started to deter demand, with fabricators seeing orders weaken this month. Copper fell to $13,765 a ton on the London Metal Exchange as of 10:47 a.m. in Shanghai, paring its gain this week to about 1.5%. Zinc declined to $3,556.50, after spiking to the biggest since 2022 on Thursday as a major smelter in Peru suspended operations due to a fire.

Gao Yin, an analyst at Shuohe Asset Management Co., stated that copper may fluctuate this quarter without any notable tightening in supply and demand balances. Copper prices are expected to be volatile in the coming months due to the stronger dollar and higher US Treasury yields.