Copper futures on Monday reached around $6.4 per pound, continuing last week's decline. This price marks the lowest level in the past six weeks and is influenced by strong expectations of an interest rate hike by the Federal Reserve in the United States.
Expectations for an interest rate hike
Traders increased their bets on a Federal Reserve interest rate hike following stronger-than-expected inflation data from the United States released on Friday. According to forecasts, markets currently predict an approximately 86% chance of a 25 basis point increase in the Federal Reserve's policy rate on Wednesday.
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Factors influencing commodity markets
In addition to the drop in copper prices, oil prices have also risen due to the shutdown of a vital east-west pipeline in Saudi Arabia that passes through the Strait of Hormuz. This shutdown has raised concerns about rising inflation. Furthermore, last Thursday, copper prices fell by nearly 5% due to reports of a delay in the Trump administration's decision regarding tariffs on refined copper imports.
U.S. officials expressed concerns that the proposed tariffs could lead to further increases in domestic copper prices and higher production costs. These factors have once again put pressure on the copper market, causing significant price volatility.
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