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Copper Prices Edge Higher as Weaker Dollar, Falling Inventories Offset Geopolitical Risk
Copper prices held steady on Monday, posting a marginal gain as a weakening U.S. dollar and declining warehouse inventories provided support. Benchmark copper on the London Metal Exchange (LME) traded 0.1% higher at $13,501 per metric ton in official rings, though gains were limited by escalating geopolitical tensions in the Middle East.
Falling Stockpiles and Softer Dollar
A key supportive factor for the industrial metal was a significant drawdown in available supply. According to a report from Investing.com, copper inventories in LME-approved warehouses have fallen by more than 20% since the end of May, hitting a four-month low of 305,200 tons. A decline in exchange stockpiles often signals robust physical demand.
Further tailwinds came from a weaker U.S. dollar. A decline in the greenback makes dollar-denominated commodities like copper more affordable for buyers holding other currencies, a dynamic that can stimulate international demand.
AdGeopolitical Tensions Limit Gains
Despite the positive fundamental signals, the market's upside was capped by renewed military conflict between the United States and Iran. The tensions have caused a sharp increase in oil prices over concerns about potential disruptions to energy shipments through the Strait of Hormuz.
This heightened geopolitical risk can dampen investor appetite for assets like industrial metals, which are sensitive to the global economic outlook and broader market sentiment.