Copper prices extended their winning streak for a fifth consecutive session, driven by investment funds. However, the strong USD and uncertainty surrounding US tariff policies with China are creating significant headwinds. Will this rally be sustainable?
Copper prices rise for a fifth consecutive session: Signals from investment funds
Copper prices continued their recovery, marking the fifth consecutive session of gains as investment funds returned to the market. On the London Metal Exchange (LME), three-month copper futures rose 0.4% to $9,041 a tonne, after falling to a five-month low of $8,757 a tonne last week.
In the US, Comex copper prices also recorded an increase of 1.3%, reaching $4.23 per pound.
The active participation of investors has generated momentum for the market, helping copper prices recover from their short-term bottom.
Strong USD: A significant "resistance" for the metal market
Although copper prices have increased, the strong USD is putting considerable pressure on the metal market. Positive economic data from the US has pushed the USD index higher, making commodities priced in the greenback more expensive for buyers using other foreign currencies. This could constrain the rise in copper prices, particularly given the market's exposure to other uncertainties.
Trade tensions - Concerns about US tariff policy
Uncertainty about the possibility of imposing tariffs on imports from China—the world's largest copper consumer—is also raising concerns.
President-elect Donald Trump had vowed to impose a 60% tariff on imports from China.
However, on January 7, Trump denied a Washington Post report that his aides were considering imposing tariffs on key imports from China. The conflicting reports have left the market cautious, with many investors waiting on the sidelines for official decisions.
How long will the copper rally last?
The recovery in copper prices after a period of decline is a positive sign, but uncertainties such as a strong USD and tariff policies remain potential risks. As an important base metal, copper prices are heavily influenced by the outlook for global economic growth and demand from key industries such as construction and electronics.
If the USD continues to strengthen or trade tensions escalate, the upside potential could be limited.
Copper prices are on a positive recovery path, but the road ahead is still fraught with challenges. Investors need to monitor developments closely to make decisions that are aligned with the market situation.
