Blog

Copper prices are approaching historic highs as the possibility of US import tariffs draws increasing volumes of refined metal into the United States, tightening supplies elsewhere even though analysts do not see an underlying global shortage.

Three-month copper on the London Metal Exchange reached as much as $14,343 per metric ton on Tuesday, leaving it close to the record of $14,527.50. The move followed orders to withdraw 65,400 tons of copper from LME warehouses over recent days.

The scale of those warrant cancellations has renewed concerns about available supply after rising inventories on the LME and Shanghai Futures Exchange had briefly eased fears of market tightness.

Analysts say the key issue is not a lack of copper globally, but its increasingly uneven distribution. With the metal essential for electricity grids, electric vehicles and AI data centres, the diversion of material towards the US is reducing readily accessible inventories in other markets.

COMEX stockpiling changes copper market dynamics

A premium for copper in the US has encouraged traders to move metal into COMEX warehouses ahead of the possibility of tariffs on refined copper beginning in 2027.

As inventories accumulate in the US, stocks elsewhere are being depleted, effectively tightening a global market that had been expected to produce a sizeable surplus this year.

Robert Edwards, principal copper analyst at CRU, said removing US-stockpiled copper from the available global supply would leave the market “at best a balanced market.”

COMEX inventories have risen for 46 consecutive days and now stand at a record 675,185 metric tons, reflecting an arbitrage trade that benefits from higher US prices.

The accumulation is particularly significant given that CRU had forecast a 639,000-ton global copper surplus for 2026.

“If (U.S.) imports keep coming in as they have been, then it’s going to look like a deficit market in reality,” Edwards said.

US imports of refined copper cathodes approached 885,000 tons during the first six months of 2026, about 3% above the same period last year and more than double the amount imported in the first half of 2024.

The country had already imported a record 1.64 million tons of refined copper during 2025.

Trump tariff decision could trigger another price shock

The copper market faced a similar situation last year, although refined metal was eventually exempted from tariffs, triggering an immediate price reversal.

Uncertainty has returned because the US Commerce Department was due to report to the White House on copper markets by June 30, allowing President Donald Trump to determine whether a 15% tariff should be introduced from January 1, 2027, followed by a 30% rate from 2028.

The huge inventories accumulated in the US could take a long time to work through, according to Macquarie strategist Alice Fox.

“Based on our numbers, you’re looking at years for that metal to get consumed,” she said.

Macquarie sees greater downside risks for copper under some scenarios, but Fox said prices would “massively spike” if Trump ultimately decides to implement the tariff.

Glencore argues clarity could bring prices lower

Glencore chief executive Gary Nagle believes uncertainty itself is a major reason behind copper’s strength and expects a definitive tariff announcement could ultimately put downward pressure on prices.

Whether Washington chooses a tariff of zero, 15% or 30%, a confirmed decision would remove an important source of uncertainty from the market.

“You’ll have these high stockpiles in the U.S., which over time will be drawn down for use … not to be exported again” because of the costs involved, Nagle said during an earnings call.

Copper already stored in COMEX warehouses is duty-paid, potentially encouraging those inventories to remain inside the US market.

That could leave other regions facing continued supply pressure. China, despite being the world’s largest copper-smelting country, may have limited ability to fill the gap because of strong domestic demand, according to Amelia Fu, head of commodities market strategy at Bank of China International.

Fu said low inventories, disruption at copper mines and an outage at Indonesia’s Gresik smelter were adding to market tightness.

“We could see new record highs in copper prices in coming weeks or months,” she said.

Gold prices slipped modestly on Wednesday but remained within reach of a three-month high as declining oil prices and lower US Treasury yields reduced concerns over inflation and supported the broader outlook for bullion.

Investors were also closely following diplomatic developments involving Iran and Oman, with discussions over the Strait of Hormuz raising hopes that more commercial shipping could resume through the strategically important waterway.

At 01:10 ET, or 05:40 GMT, XAU/USD declined 0.4% to $4,642.38 an ounce, while gold futures edged 0.1% higher to $4,699.04.

Elsewhere, XAG/USD gained 0.7% to $69.05 an ounce and XPT/USD rose 0.3% to $1,866.89. The US Dollar Index increased 0.1% to 99.01.

Gold retains support after strong weekly rally

Bullion has climbed more than 7% over the past week and remains close to the three-month peak reached in the previous session.

Part of that strength has come from falling US Treasury yields and weaker crude prices, which have helped reduce inflation concerns and eased some of the pressure on expectations for Federal Reserve monetary policy.

Treasury yields fell by roughly five to seven basis points across the curve on Tuesday. Oil prices also moved lower as markets became more optimistic about the possibility of easing tensions in the Middle East.

Iran and Oman have discussed establishing a “temporary joint maritime corridor” that could allow some shipping to restart through the Strait of Hormuz.

The direction of energy prices has important implications for bullion. Higher oil costs can feed into broader inflation, potentially giving the Fed another reason to maintain restrictive interest rates.

That environment can be negative for gold because the metal offers no interest income and must compete with yield-bearing assets. Falling yields, by contrast, tend to improve the relative appeal of holding bullion.

Fiscal concerns keep debasement trade alive

The recent gold rally has also renewed attention on the so-called debasement trade, which reflects investor concerns over government borrowing, fiscal policy and the long-term value of fiat currencies.

ANZ analysts said US Treasury Secretary Scott Bessent had offered no new indication regarding the debt-management measures announced last week.

Reports have nevertheless suggested that the Treasury could use some of its cash balance to finance buybacks of older securities carrying higher yields.

Such developments have kept concerns over sovereign debt management in focus and reinforced gold’s role for some investors as an alternative to government bonds and currencies.

PCE inflation and Jackson Hole could determine gold’s next move

Markets are now preparing for two significant US policy events that could influence the direction of gold.

The Personal Consumption Expenditures report due on Wednesday will provide a fresh assessment of inflationary pressure and economic conditions in the US.

Boston Fed President Susan Collins has said she favours keeping interest rates unchanged for the time being, provided inflation continues moving towards the Federal Reserve’s 2% objective.

Attention will then shift to Federal Reserve Chair Kevin Warsh, who is scheduled to deliver his first major speech as chair at the Jackson Hole symposium on Friday.

Investors will be looking for clearer guidance on how Warsh assesses persistent inflation risks against the wider economic outlook, as well as the circumstances that could prompt the central bank to change interest rates.

Warsh has faced criticism over uncertainty surrounding his economic views, increasing the importance of Friday’s address for financial markets.

Gold’s strong recent performance has meanwhile brought the debasement trade back into focus after the theme helped propel bullion higher in 2025. Concerns over fiscal deficits, sovereign debt and the purchasing power of conventional currencies could continue to provide an underlying source of demand for the precious metal.

Oil prices moved sharply lower again on Wednesday as investors reacted to reports of progress in diplomatic efforts aimed at easing the Middle East conflict and restoring shipping through the Strait of Hormuz.

By 04:17 ET, or 08:17 GMT, Brent crude futures were down 2.6% at $86.30 a barrel, while US West Texas Intermediate futures had fallen 2.7% to $80.18.

The declines extended Tuesday’s selloff, when oil prices dropped more than 5% following reports that Washington and Tehran could be nearing another ceasefire agreement.

Reports suggest US and Iran are moving closer to a deal

Russian state-owned agency RIA Novosti reported that the US and Iran were close to reaching a new ceasefire agreement, citing sources in Pakistan and Iran.

According to the report, the proposed arrangement would provide for free navigation through the Strait of Hormuz and could be formally announced in the coming days. Investing.com said it was unable to independently verify the report.

The claims follow comments from Pakistani officials indicating that progress had been made in mediation efforts with Iran and that discussions included the possible restoration of an interim ceasefire.

Pakistan has emerged as an important mediator during the US-Iran conflict and also played a role in brokering a ceasefire between the two sides in June.

Temporary Hormuz shipping route adds pressure to crude

Further pressure on oil came from reports of progress between Iran and Oman over maritime traffic through the Strait of Hormuz.

Al Jazeera reported that a senior Iranian official said the two countries had agreed on a temporary route through the waterway following talks in Tehran.

The official reportedly cautioned, however, that a full reopening would depend on the US meeting commitments contained in a framework ceasefire agreement signed in June.

The possibility of increased commercial shipping through the strait has encouraged traders to remove some of the supply-risk premium that had built into crude prices since the conflict began.

Vital Knowledge analysts warned that renewed fighting remains a significant possibility, describing the risk as always “just around the corner.”

“[A] geopolitical risk factor will be permanently embedded in the price,” they said.

Hormuz traffic remains far below normal levels

Despite the diplomatic developments, shipping activity through the Strait of Hormuz remains heavily restricted.

Preliminary Kpler data cited by CNBC showed that just five commodity vessels crossed the waterway on Tuesday, well below the 10-day moving average of 15.

Before hostilities began in late February, around 20% of global oil and liquefied natural gas shipments passed through Hormuz, making access to the route a major factor for international energy markets.

The Iran-Oman discussions also followed the introduction of tighter US economic sanctions against Tehran a day earlier.

Washington has indicated that it currently favours increasing economic pressure rather than pursuing additional military strikes, adding another dimension to the diplomatic and market outlook.

Oil prices are therefore likely to remain highly responsive to any further evidence of progress, or setbacks, in efforts to restore normal traffic through the Strait of Hormuz.

European natural gas prices fell sharply on Wednesday, retreating from five-month highs as signs of possible diplomatic progress between the US and Iran reduced some of the geopolitical risk premium that had built into energy markets.

Benchmark Dutch front-month gas futures dropped 3%, while equivalent British wholesale gas contracts also declined by around 3%.

The reversal interrupted a multi-week rally that had taken European gas prices to their highest levels since mid-March. That increase had been driven partly by concerns over Qatari liquefied natural gas cargoes and slower-than-normal injections into European storage facilities.

Energy traders reduced geopolitical risk positions as crude markets also weakened sharply. Brent crude fell more than 2.5% towards $86 a barrel, extending heavy losses across two consecutive sessions.

Hormuz discussions trigger broader energy selloff

The decline in European gas prices followed a series of more encouraging diplomatic developments in the Middle East.

Reports suggested that the US and Iran were moving closer to an interim ceasefire agreement mediated by regional partners, potentially including commitments to allow commercial vessels to navigate freely through the Strait of Hormuz.

Sentiment improved further after representatives from Iran and Oman confirmed that bilateral discussions had resumed over securing and managing the strategically important shipping route.

The possibility that seaborne LNG shipments from the Persian Gulf could resume more freely outweighed concerns surrounding Washington’s introduction of tougher economic sanctions earlier in the week.

For European industrial and utility buyers, improved access through Hormuz could reduce the threat of supply shortages ahead of the peak winter heating period.

European gas storage remains below seasonal norms

Despite Wednesday’s decline in wholesale prices, Europe’s gas storage position remains considerably weaker than historical averages.

Figures from Gas Infrastructure Europe show storage facilities across the bloc at approximately 62% of capacity, compared with a five-year seasonal average of around 79%.

Strong summer electricity demand linked to air conditioning, combined with disruption to spot LNG deliveries, has restricted the pace at which European utilities have been able to replenish inventories.

The shortfall means that developments affecting LNG supplies remain particularly important as Europe approaches the autumn and winter demand period.

Gas market remains exposed to Hormuz developments

The European forward gas curve remains in pronounced backwardation, creating additional challenges for utilities purchasing expensive spot supplies for storage.

Holding higher-priced near-term gas can expose buyers to losses if forward prices remain lower, reducing the incentive to build inventories aggressively.

As a result, wholesale European gas prices are expected to remain highly sensitive to developments surrounding the Strait of Hormuz.

While progress towards a ceasefire and improved navigation has removed some of the immediate supply premium, any deterioration in negotiations could quickly restore concerns over LNG availability as the European heating season approaches.

Eurozone government bond yields moved lower on Wednesday as a sharp fall in global oil prices eased concerns about inflationary pressure stemming from Middle East supply risks.

The decline in crude provided support for European fixed-income markets despite fresh hawkish signals from European Central Bank policymakers suggesting that interest rates may need to remain restrictive.

Germany’s two-year Schatz yield slipped to 2.781%, while the benchmark 10-year Bund yield declined to 3.195%. The latter moved back below the closely watched 3.20% level after trading near 15-year highs last week.

Ceasefire hopes trigger further oil price decline

Brent crude fell by more than 2.5% to around $86 a barrel, extending losses from recent sessions.

The decline followed media reports suggesting that the US and Iran are moving closer to an interim ceasefire agreement that would include guarantees for unrestricted transit through the Strait of Hormuz.

Expectations that maritime traffic could resume more freely through the strategically important waterway reduced immediate concerns about energy supplies.

The resulting decline in oil prices also eased some of the cost-driven inflation premium that had built into European interest-rate markets during recent weeks.

Schnabel’s hawkish comments limit bond rally

The decline in yields was contained by comments from European Central Bank Executive Board member Isabel Schnabel, who signalled that additional monetary tightening may be required to bring inflation sustainably back to target.

In an interview with Bloomberg News published on Wednesday, Schnabel said that “at the current policy rate, inflation is unlikely to return to target over the medium term, and therefore further tightening will be necessary.”

She also pointed to continuing tensions in the Middle East and resilience across the Eurozone economy as factors that could create further upside risks for consumer prices.

The comments reinforced expectations in money markets that the ECB could raise rates by 25 basis points in September. That prospect prevented a larger decline in European borrowing costs and kept shorter-dated yields relatively supported.

Bond markets turn attention to Jackson Hole

With Eurozone yields moving below their recent highs, investors are now preparing for another major monetary policy event later this week.

Federal Reserve Chair Kevin Warsh is scheduled to deliver his inaugural keynote address at the Jackson Hole Economic Policy Symposium on Friday.

Fixed-income markets will scrutinise his remarks for indications of whether the Federal Reserve intends to maintain relatively restrictive interest rates.

Any signal that US monetary policy will remain tighter for longer could influence European bond markets as well, potentially shaping sovereign yields and spreads heading into the autumn.