Copper Falls as Mideast Crisis Clouds Global Outlook
Copper prices slipped on Wednesday as escalating hostilities between the United States and Iran rattled investor confidence and raised fears that higher oil costs could reignite inflationary pressures, complicating the outlook for interest rate cuts.
Middle East tensions weigh on metals
Copper on the London Metal Exchange fell 0.3 percent to $14,226 per metric tonne during official trading, after touching $14,092 — its lowest level since late August. The decline marked the second straight session of losses following a seven-month peak of $14,441.50 reached just a day earlier.
The selloff reflected growing anxiety over the economic consequences of escalating military exchanges between Washington and Tehran. US forces struck Iranian targets, and Tehran responded with attacks on American bases across the region. The conflict heightened concerns that disruptions to energy markets could push oil prices higher, feeding inflationary pressures and complicating the outlook for global growth.
Dollar strength compounds pressure
The US dollar climbed to a two-week high as the conflict intensified, adding further strain on commodities priced in the currency. A stronger greenback makes dollar-denominated metals more expensive for buyers using other currencies, potentially weakening demand and compounding concerns around global industrial activity.
John Meyer, an analyst at SP Angel, said the renewed geopolitical tensions were weighing broadly across base metals. “All the base metals are softer on the back of higher oil prices caused by the renewed conflict between the US and Iran,” he said.
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The dollar’s strength came as investors increasingly priced in the possibility of further monetary tightening in the United States. The analyst said expectations were growing that the Federal Reserve could raise interest rates in September. “It’s increasingly likely that the Fed will raise rates,” he said. Higher borrowing costs can weigh on sentiment towards industrial metals by slowing investment and economic activity, thereby weakening expectations for future demand.
Zinc retreats from four-year peak
Zinc was among the biggest decliners on Wednesday, falling 1.2 percent to $3,875 per metric tonne. The metal had risen to a four-year high of $3,990 on Tuesday, supported by speculative buying and tight inventories outside China. However, fresh warehouse data pointed to some easing in supply concerns.
Daily LME figures showed small inflows of both copper and zinc into exchange-registered warehouses, offering tentative evidence of less severe supply tightness. The additional stocks helped narrow premiums for cash metal over three-month contracts in both markets, reducing some of the urgency among buyers seeking immediate supplies.
Elsewhere in the complex, tin fell 0.6 percent to $54,290 per metric tonne, after touching a one-month low of $53,850. Nickel edged down 0.1 percent to $16,650, recovering some ground after earlier falling to $16,500, its lowest level in seven weeks. Aluminium declined 0.9 percent to $3,253, while lead fell 0.8 percent to $1,904.
The broader metals sector faced headwinds as Zoho upgrades Catalyst to close AI production concerns intersected with traditional commodity market pressures. Investors remain cautious as geopolitical risks continue to reshape global trade patterns and industrial demand outlooks.
