FX.co ★ Copper Hits Over 4-Month Highs

Copper futures have surged past $5.4 per pound, marking their highest point in over four months. This upward movement is driven by anticipated economic support measures in China and a recent interest rate reduction by the US Federal Reserve. During its annual economic planning session, Beijing pledged to implement proactive fiscal strategies to enhance consumption and investment in the coming year. In the United States, the Fed executed its third 0.25% rate cut this year, hinting at a more dovish stance than market participants had anticipated. Additionally, supply constraints are contributing to price increases. Production challenges in Chile and Peru—together responsible for almost 40% of the world’s copper output—persist amid decreasing ore grades, water shortages, and bureaucratic delays. Concurrently, inventories at the London Metal Exchange have plummeted after significant withdrawals, which seem to be a precautionary measure against the possibility of US tariffs on refined copper in the upcoming year.