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 selling pressure. This resurgence was driven by aggressive bargain hunting from investors, a softening US dollar, and a renewed sense of optimism across global financial markets.

Copper Recovers After Steep Mid-Week Sell-Off

After losing more than 4% of its value during the previous two sessions, the London Metal Exchange (LME) benchmark three-month copper price gained 1.1%, reaching $13,233 per metric ton. This rebound follows a period of intense volatility that had left many investors looking for entry points at lower valuations.

Ewa Manthey, a commodities strategist at ING, noted that the recovery is being underpinned by a combination of improved risk appetite and a weaker dollar. Interestingly, the wider financial market's mood has been lifted by the technology sector; strong earnings and positive forecasts from semiconductor giants Micron and Qualcomm have reignited the artificial intelligence (AI) rally, indirectly boosting investor confidence in industrial metals.

The Impact of a Weaker US Dollar and Interest Rate Outlook

A key driver in the commodity rebound is the movement of the US dollar index. As the dollar softens, commodities priced in US currency become relatively cheaper for buyers using other currencies, effectively stimulating demand.

However, the macroeconomic outlook remains complex. While the dollar has seen some softening, investors are closely monitoring upcoming U.S. inflation data. There is a growing market belief that interest rates may be hiked at least once this year. This "higher-for-longer" interest rate environment continues to act as a headwind for industrial metals, as higher borrowing costs can dampen global manufacturing and construction activity.

Mixed Performance Across Other Industrial Metals

The recovery in copper was not an isolated event in the metals sector, though performance varied across different commodities:

• Aluminium: LME aluminium rose 0.8% to $3,148 a ton. This follows a period where the metal had surrendered its recent gains as market concerns shifted from geopolitical disruptions to energy price normalization. Conversely, aluminium on the Shanghai Futures Exchange saw a decline, closing daytime trading at 22,865 yuan ($3,360.82) per ton.
• Nickel: LME nickel edged up 0.3% to $16,860 a ton. This slight uptick comes amid uncertainty regarding production quotas from Indonesia, the world's top producer, as markets speculate on potential increases in supply caps for 2026.
• Other Metals: Zinc rose 0.3% to $3,432 a ton, lead added 0.4% to $1,921, and tin saw a notable advance of 1.1% to reach $50,245.

Key Takeaways

• Copper Rebound: LME copper gained 1.1% to $13,233 per metric ton, driven by bargain hunting after a 4% decline in previous sessions.
• Macro Drivers: A weaker US dollar and a surge in tech-led market optimism are supporting metal prices, though high U.S. interest rate expectations remain a risk.
• Broader Market Sentiment: While copper and nickel saw gains, the metals market remains cautious due to shifting energy narratives and uncertain global inflation data.