Copper Prices Weak on Dollar Strength

Copper prices climbed at the end of the week’s trading, in keeping with a bounce from global equities. However, the commodity was still on a downward trend overall.

The US Dollar’s rising strength, plus the growing anticipation of a pre-emptive US interest rate hike, has kept copper heading for its most significant weekly dip since November 2021.

Three-month copper prices on the London Metal Exchange rose by 0.6% to trade at $9,590 a ton. This came after the commodity reached a low this week, not seen since global central bank uncertainty in November last year.

Meanwhile, the principal copper contract on the Shanghai Futures Exchange slid by 0.5% to trade at 69,560 Yuan per ton. Copper’s mediocre performance was contrasted with other industrial metals, like aluminum, nickel, zinc and tin, which all rose in this week’s trading.

Analysts contend that the firmer US Dollar is making greenback-priced metals more expensive to holders of other currencies, with copper being caught in a storm involving a stronger Dollar and the prospect of interest rate hikes chipping away at liquidity in financial markets. 

What does this mean for me?

Commodities play a key role in the global economy as they are the raw materials that drive much of manufacturing and construction.

In an interdependent global marketplace, commodities are just as prone to movements dictated by supply and demand forces in related markets. If you are interested in trading in commodities, you need to study what drives commodity price changes.