Copper futures slipped below $6.3 per pound on Wednesday, erasing earlier weekly gains as a combination of geopolitical tensions and central bank policy fears cast a shadow over industrial metals markets.
The selloff was triggered in part by fresh escalation in the Middle East, where the US conducted “self-defense strikes” against Iran following the downing of an American helicopter. The move raised concerns about derailed peace negotiations and added to inflationary pressures that could push borrowing costs even higher.
Adding to the uncertainty, investors turned cautious ahead of the latest US inflation release. The data takes on added significance after last week’s stronger-than-expected jobs report reinforced bets that the Federal Reserve will proceed with another rate hike later this year — a headwind for industrial metals broadly.
Despite the near-term weakness, the long-term supply picture remains tight. Jefferies maintained a constructive outlook, forecasting that copper prices could stay elevated for longer than previously anticipated. The investment bank cited an average annual supply deficit of 491,000 tons projected through 2030, compounded by a slower-than-expected operational recovery at the Grasberg mine.
For now, copper futures remain caught between a challenging macro backdrop and a fundamentally undersupplied market.
