FX.co ★ Copper Falls to 3-Week Low

Copper futures fell below $6.20 per pound on Thursday, hitting a three-week low, as escalating uncertainty in the Middle East and rising expectations of further interest rate hikes by major central banks pressured the industrial metals market. The US and Iran traded strikes this week in a significant breach of their ceasefire, though the US military later said it had concluded its latest operations against Iran, fueling hopes that geopolitical tensions might ease.

At the same time, US consumer inflation accelerated in May to its fastest pace in more than three years, driven largely by surging energy prices, though the result was in line with market forecasts. Traders slightly scaled back expectations for additional Federal Reserve rate hikes this year, yet a 25-basis-point increase in December remains fully priced in. The likelihood of higher borrowing costs continues to weigh on the demand outlook for metals, as tighter monetary policy is expected to eventually dampen economic activity and industrial consumption.