Copper Hits 5-Week Lows Due to Stronger Dollar

Copper prices slid to five-week lows on Thursday, weighed down by a surging U.S. dollar, which reached its strongest level in nearly two years.

The dollar’s rally followed signals from the Federal Reserve that interest rate cuts will proceed at a slower pace next year. Adding to the pressure on industrial metals was uncertainty surrounding potential U.S. trade policies under President-elect Donald Trump, who has proposed tariffs on imports. Such measures could trigger trade conflicts, weaken global economic growth, and reduce demand.

XAU/USD

Benchmark copper on the London Metal Exchange (LME) dropped 1.8% to $8,869 per ton, touching its lowest point since November 14. A stronger dollar increases the cost of dollar-denominated metals for holders of other currencies, curbing demand.

This dynamic is often exploited by algorithmic trading funds, which reportedly began selling copper as the dollar climbed after the Fed stated that future rate cuts would hinge on slowing inflation.

Other base metals also declined. Aluminum fell 0.8% to $2,510.7 per ton, while lead slipped 0.7% to $1,968 per ton. Tin dropped 2.5% to $28,380 per ton, and nickel lost 2.6% to $15,105 per ton.

Gold Shows Mixed Performance Amid Fed Signals

Spot XAU/USD edged up 0.06% to $2,589 per ounce after briefly touching its lowest level since November 18. U.S. gold futures, however, fell 1.9% to $2,603.60 per ounce. Gold erased earlier gains as the Federal Reserve adopted a cautious stance on easing monetary policy in the coming year.

Agricultural Commodities React to Market Shifts

In agricultural markets, Chicago soybean futures rebounded on Thursday, supported by technical buying after hitting a four-year low. Wheat prices, however, dropped to historic lows as a stronger dollar and concerns over competition from other exporting regions weighed on the market. Corn prices remained volatile, pressured by wheat’s weakness and the dollar’s strength, according to traders.

Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.