Copper Prices Rebound as Bargain Hunting and Softer Dollar Boost Markets

Copper prices staged a significant recovery on Thursday, bouncing back after two consecutive days of heavy losses. This turnaround was fueled by aggressive bargain hunting from investors alongside a weakening U.S. dollar and a general uptick in global risk appetite.

Copper Recovers from Steep Sell-off

After shedding more than 4% of its value over the previous two trading sessions, the London Metal Exchange (LME) benchmark three-month copper price gained 1.1%, reaching $13,233 per metric ton. This rebound comes as investors viewed the recent price dip as a buying opportunity.

According to Ewa Manthey, commodities strategist at ING, the recovery is being underpinned by a softer dollar and improved sentiment across wider financial markets. Interestingly, the broader market optimism was bolstered by a surge in global stocks, driven by strong earnings and optimistic forecasts from semiconductor giants Micron and Qualcomm, which helped reignite the artificial intelligence (AI) rally.

The Role of the U.S. Dollar and Interest Rate Speculation

Currency fluctuations played a pivotal role in the metals' recovery. A slightly weaker U.S. dollar index—which had hit a 13-month peak on Wednesday—has made commodities priced in USD more affordable for international buyers using other currencies.

However, the macro outlook remains complex. Investors are closely monitoring upcoming U.S. inflation data, which may influence the growing belief that interest rates could be hiked at least once this year. Manthey noted that the "higher-for-longer" U.S. interest rate expectations continue to weigh on industrial metals, maintaining a level of caution within the broader market.

Performance Across Other Key Industrial Metals

The recovery was not limited to copper, as several other metals saw marginal gains:

  • Aluminium: LME aluminium rose 0.8% to $3,148 a ton. This follows a period where the metal had lost its gains related to earlier energy concerns. Analysts at Sucden Financial noted that the market has rapidly repriced as the narrative shifted from supply disruption to normalization. Conversely, the most-traded aluminium contract on the Shanghai Futures Exchange shed 2.6%, closing at 22,865 yuan ($3,360.82) per ton.
  • Nickel: LME nickel added 0.3% to reach $16,860 a ton. This movement follows news from Indonesia, the world's top producer, stating that a decision on the 2026 nickel production quota has not yet been reached amid speculation of a potential production cap increase.
  • Other Metals: LME zinc rose 0.3% to $3,432 a ton, lead added 0.4% to $1,921, and tin advanced by 1.1% to $50,245.

Key Takeaways

  • Copper Recovery: Copper prices rose 1.1% to $13,233 per ton, rebounding from a recent 4% decline due to bargain hunting and improved risk appetite.
  • Currency Impact: A weaker U.S. dollar has improved the affordability of commodities for global buyers, though high interest rate expectations remain a headwind.
  • Market Drivers: While AI-driven tech earnings boosted overall market sentiment, industrial metals remain sensitive to U.S. inflation data and global interest rate trajectories.