After hitting a historic high, copper prices encounter resistance! Prices fall back to $14,200 as the market waits for signals from the Federal Reserve.

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After reaching a record high, copper prices have pulled back, as the stabilization of the US dollar has weakened some of the momentum that previously drove metals higher. However, factors such as low inventory, tightening spot supply, and insufficient development of new mines continue to support copper prices, and the market remains optimistic about the medium- to long-term outlook for copper.

On Tuesday, most base metals on the London Metal Exchange (LME) closed lower. LME copper prices once fell to $14,149 per ton, after setting a record closing high the previous day, and eventually settled at $14,273 per ton. As of press time, copper's decline narrowed to 0.1%, quoted at $14,257.9 per ton. Other base metals such as aluminum and nickel also fell, with aluminum down 0.4% and nickel down 0.5%.

In the short term, market focus is shifting to US Federal Reserve Chair Walsh’s speech this Friday at the Jackson Hole central bank annual meeting. Investors are looking for clues on how the Fed will address inflation and whether further adjustments to monetary policy are possible.

The US dollar stabilizes, copper market supply side remains in focus

Last week, US bond market intervention temporarily pushed down the dollar and boosted metal prices. But this week, the dollar has stabilized, weakening related support. On Monday, Bessent did not provide further details on the debt management reform plan, and the market enthusiasm surrounding bond market intervention has cooled.

The supply side remains an important support for copper prices. LME copper inventories remain relatively low, and the market continues to worry that insufficient development of new mines could widen the future supply gap. Over the past week, inventory concerns have drawn further attention, with spot copper once trading significantly higher than copper futures, indicating intensified competition for short-term spot resources in the market.

Although the spot-futures price spread has since narrowed somewhat, the large-scale delivery applications seen on Monday have still attracted market attention. In its latest report, Citi reiterated its forecast for copper prices to reach $15,000 per ton by year-end, and suggested investors buy on dips after market positioning falls from elevated levels.

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