After gold and silver, this metal can also rise sharply: copper is approaching a historic record
The copper price gets a whiff of high inflation rates. But thanks to tight supply and AI, the metal is more than 15 percent higher this year.
After the impressive price rises of gold and silver, there may be another metal that can make a nice rally: copper.
The value of industrial metal has already risen considerably this year and is still close to its historic record. Nevertheless, the price of copper has now taken a big hit due to the new US inflation figures.
Where the prices of gold and silver are usually expressed per troy ounce, copper is often traded per pound. The copper price hit a record high of about $7 per pound last month.
Since then, the enthusiasm has cooled down a bit. On Thursday, the price dropped to $6.50, a drop of about 5 percent from the record. Nevertheless, copper is still more than 15 percent higher this year.
A major reason for this increase is the global shortage of supply.
In Chile, a large copper mine was hit by a fatal accident, after which mining company Codelco had to shut down work. The Grasberg mine in Indonesia is also facing production problems.
In addition, US import tariffs have had a striking effect. Large quantities of copper were shipped to the United States in anticipation of potential tariffs, putting pressure on availability elsewhere.
The growth of artificial intelligence (AI) also plays a role. Huge amounts of copper are needed for data centers and power grids.
Nevertheless, the copper price suffered a major setback this week.
US inflation turned out to be a lot higher than expected on Wednesday, rising to the second highest level since November 2022. As a result, investors are again taking into account a stricter interest rate policy from the Federal Reserve.
This is less favorable for copper. Higher interest rates can slow economic growth and thus also reduce the demand for industrial metals.
On Thursday, copper dropped to $6.50 per pound. With that, the metal headed for its third consecutive day of losses, the longest run since June.
On the price chart, the first major support is around 6.55 dollars per pound. If copper sinks underneath, the zone comes into view around 6.35 dollars.
Despite the price dip, the long-term outlook remains supported by a tight supply, but for the time being the market shows that copper is not immune to disappointing economic news either.