FX.co ★ Copper Pressured by Hawkish Fed Outlook

Copper futures slipped to about $6.66 per pound on Friday, hitting a one-week low as a stronger US dollar and rising Treasury yields pressured prices amid expectations that the Federal Reserve will keep raising interest rates to curb inflation. Tighter monetary policy and higher borrowing costs risk slowing global economic growth, which could in turn dampen demand for industrial metals.

Even so, copper prices continue to find support from persistent supply concerns. Unionized workers at Escondida—the world’s largest copper mine, located in Chile—have called for a strike after rejecting a wage offer. In addition, metals trader Sprott Asset Management noted that global mined copper production could fall this year for the first time since 2017. Disruptions at major operations in Indonesia and the Democratic Republic of Congo have already cut projected annual output by an estimated 600,000 tons.

On the demand side, consumption remains robust, particularly from power grid expansion, AI data center construction, and the defense sector.