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Metals — including copper, aluminum and zinc — rebounded after hotter-than-expected US inflation and a selloff in AI stocks rattled markets this week.
Risk appetite returned on Friday, with copper snapping three days of decline triggered in part by concerns over Federal Reserve interest rate hikes that could cool demand for commodities. Aluminum bounced from its lowest close this year, and zinc jumped as much as 1.5%.
The outlook for US monetary policy has been a key driver of metals in recent months, but a range of sector-specific factors have also been in play. For copper, shifting expectations for US trade policy have had a dramatic impact, after a huge flow of metal into the US in anticipation of possible tariffs tightened markets elsewhere.
“Industrial metals will continue to post mixed performance, caught between a challenging macroeconomic backdrop and increasingly divergent commodity-specific fundamentals, with tighter monetary conditions to limit broad-based upside,” BMI, a Fitch Solutions company, said in a note.
Fed Chair Kevin Warsh said nothing to dispel expectations the Fed will hold rates in October during an appearance in Bangkok Friday, easing bets on an imminent rate hike. Markets are still pricing in one quarter-point rise before the end of the year.
Copper rose 0.1% to $14,365 a ton on the London Metal Exchange as of 1:37 p.m. in New York, while aluminum climbed 0.8% to $3,010 and zinc was 0.6% higher at $3,685 a ton.
Citigroup Inc. said in a note that it’s “near-term neutral” on copper and aluminum, seeing prices little changed from near current levels in the coming three months.
“Positioning in both metals is elevated, with 2027 balances looking close to flat for copper and in surplus for aluminum amid stronger supply growth expectations for both metals into next year,” the bank said.
