Copper prices surged to new record levels as rising geopolitical disruptions combined with strong long-term demand, although analysts warned that the rally may be moving faster than the market’s actual fundamentals.

The latest gains were driven partly by supply concerns linked to tensions in the Arabian Gulf region, where shipping disruptions created broad effects across industrial inputs. One of the biggest concerns for mining companies is the availability of sulfuric acid, a key material used in copper extraction and processing. Traders say restrictions on this input have already started affecting production costs and supplies across parts of the global mining sector.

At the same time, copper demand continues to benefit from the expansion of artificial intelligence infrastructure, the clean energy transition, and rising defense spending. Data center construction has become a major new source of demand, as major technology companies continue pouring huge investments into computing capacity and related electrical infrastructure.

Copper market tests record levels

Nikos Tzabouras, analyst at Tradou, said the copper rally reflects the convergence of short-term supply shocks with long-term demand trends that have been building for years.

He added that copper prices “reached new record highs as structural demand drivers converged with supply concerns,” pointing to the growing impact of geopolitical disruptions and shifts in industrial policy. Copper futures on the COMEX exchange tested historic levels last week and extended their strong gains since August.

He explained that the closure of key transportation routes created immediate supply pressures, especially through its impact on sulfuric acid markets, further increasing pressure on already elevated mining costs.

Beyond the current disruptions, Tzabouras said copper’s long-term outlook remains supported by its central role in several structural growth trends.

He said: “Major technology companies continue allocating capital toward building data centers, while the clean energy transition is gaining momentum due to rising oil prices, alongside expanding defense programs as security budgets increase and geopolitical uncertainty intensifies.”

Why is copper performing so strongly?

Copper’s high electrical conductivity and broad industrial use make it essential for power grids, electric vehicles, renewable energy systems, and advanced computing infrastructure. As governments and corporations accelerate investments in decarbonization and digital infrastructure, demand for the metal has continued rising even during periods of weaker global industrial activity.

However, Tzabouras warned that the strength of the recent price rally may not be fully supported by short-term market fundamentals. Despite the strong optimism and record prices, the market could move back into surplus later this year as additional supply enters the market and demand growth remains uneven.

He said: “Fundamentals are more mixed than record prices suggest, as the market may return to surplus later this year.”

What about stagflation risks?

These warnings come as the global economy faces increasing pressure from higher energy prices and growing geopolitical fragmentation. Elevated oil prices resulting from Middle East disruptions have revived concerns about stagflation returning to parts of the global economy, which could weaken industrial demand for key raw materials including copper if manufacturing activity slows.

Tzabouras said: “Economic uncertainty could negatively affect consumption of critical metals,” adding that the market’s direction will ultimately depend on whether structural demand can offset cyclical weakness.

For now, copper remains caught between two opposing forces: strong demand linked to electrification and technology, and short-term economic disruption risks. Although the long-term narrative remains positive, analysts believe the speed and scale of the recent rally leave the market vulnerable to volatility if sentiment shifts.

Tzabouras added: “The rally may continue, but the industrial metal remains exposed to correction risks in a highly volatile macroeconomic environment.”

UBS raises copper price forecasts

UBS raised its copper price forecasts, citing a positive fundamental outlook supported by supply constraints and continued energy transition demand, despite mixed short-term demand indicators.

The bank increased its 2026 copper price forecast by 13%, while also raising its 2027 and 2028 forecasts by 4% and 3% respectively to $6 per pound, or $13,200 per ton. It also raised its long-term forecast by 10% to $5.5 per pound.

Copper prices on the London Metal Exchange recently climbed back near record highs above $13,000 per ton after a temporary pullback following the outbreak of the Middle East conflict. Physical and paper markets have also returned their focus toward copper and mining-related equities.

UBS pointed to ongoing disruptions and lower production estimates at mines including Kamoa-Kakula and Grasberg. The bank believes energy price volatility will increase the need for sustainable investment in renewable energy, electricity grids, and industrial reshoring, supporting medium-term copper demand.

According to the bank’s supply and demand model, the market is likely to move into deficit, with tighter physical markets and falling inventories expected to support elevated prices.

However, UBS also warned that the market is not currently facing an extremely severe shortage, as demand indicators remain mixed.

The bank added that mine production continues facing pressure while smelter output remains resilient, meaning the expected copper market deficit may take longer to emerge, and existing inventories must first be depleted before a clear physical shortage appears.

UBS noted that persistently high prices will increase pressure toward demand rationing and substitution, making the short-term outlook more balanced following the recent gains.

Bitcoin remained supported above the $76,000 region, where it formed a price base and stabilized above the $76,500 level before starting a new recovery wave. The price managed to break above both the $76,650 and $77,000 levels.

Buyers also pushed the price above the 23.6% Fibonacci retracement level of the decline from the $82,017 high to the $76,020 low. In addition, a bearish trendline with resistance near $77,200 was broken on the hourly chart of the BTC/USD pair.

Bitcoin is currently trading above the $77,500 level and also above the 100-hour simple moving average. If the price maintains stability above this area, it may attempt another upward move. Immediate resistance is located near the $78,300 level.

The first major resistance stands near the $79,000 level, which also coincides with the 50% Fibonacci retracement level of the decline from $82,017 to $76,020.

If Bitcoin closes above the $79,000 resistance zone, the price could continue rising toward the $80,500 level. Any further gains may push the price toward $81,500, while the next key obstacle for bulls could appear near the $82,000 level.

Is Bitcoin heading toward another decline?

If Bitcoin fails to break above the $79,000 resistance area, it may begin another downward move. Immediate support is located near the $77,200 level.

The first major support stands near $76,500, followed by another support zone around $76,000. If losses continue, the price could decline toward the $75,000 support area in the near term.

The main support is currently positioned near $73,500, a level below which Bitcoin may struggle to recover.

Technical indicators:

• The hourly MACD is gaining momentum in positive territory.

• The RSI for the BTC/USD pair is trading above the 50 level.

Key support levels:

• $76,500

• $76,000

Key resistance levels:

• $78,300

• $79,000

Oil prices rose more than 1% on Thursday after a Reuters report stated that Iran’s Supreme Leader had issued instructions not to send Iran’s near-weapons-grade enriched uranium abroad.

The report, citing two senior Iranian sources, indicated that Iran is taking a tougher stance on one of the United States’ main demands in the peace negotiations. Ayatollah Mojtaba Khamenei’s decision could further complicate talks aimed at ending the war between the United States, Israel, and Iran.

Brent crude futures rose by $1.39, or 1.3%, to $106.41 per barrel, while US West Texas Intermediate crude gained $1.56, or 1.6%, to $99.82 per barrel.

Both benchmarks had fallen around 5.6% on Wednesday to their lowest levels in more than a week after US President Donald Trump said negotiations with Iran had entered their final stages.

In a diplomatic development, Pakistan intensified efforts to accelerate peace talks between the United States and Iran, while Tehran announced it was reviewing the latest US responses. Trump suggested he may grant Iran “a few more days” to provide the “right answers,” though he also reiterated that he is prepared to resume attacks if necessary.

Analysts at ING said in a note that markets have seen similar situations several times before, which often ended in disappointment, while forecasting Brent crude to average $104 per barrel during the current quarter.

Iran warned against any further attacks and announced new measures to strengthen its control over the vital Strait of Hormuz, which remains largely closed to shipping traffic.

Before the war began, the strait handled oil and liquefied natural gas shipments equivalent to around 20% of global energy consumption.

Economic data released on Thursday showed eurozone economic activity contracted at the fastest pace in more than two and a half years during May, as higher living costs driven by the war weakened demand for services and accelerated job cuts.

Growing drawdowns from oil inventories

Iran announced on Wednesday the creation of the “Persian Gulf Strait Authority,” confirming the enforcement of a “controlled maritime zone” inside the Strait of Hormuz.

Iran had effectively closed the strait in response to the US and Israeli attacks that triggered the war on February 28. Although most combat operations stopped following the April ceasefire, Iran continues restricting shipping movements, while the United States maintains a blockade on Iranian coastlines.

Supply disruptions from the Middle East have forced consuming nations to rapidly draw down commercial and strategic inventories, raising concerns over the depletion of global reserves.

The US Energy Information Administration said on Wednesday that the United States withdrew around 10 million barrels from its Strategic Petroleum Reserve last week, the largest drawdown ever recorded. The data also showed a larger-than-expected decline in US crude inventories.

Kim Fustier, Head of Global Oil and Gas Research at HSBC, said oil prices have “remained relatively resilient despite the scale of disruptions in the Middle East.”

She added that weaker Chinese demand, combined with increased oil exports from the Atlantic Basin led by the United States, along with rapid strategic inventory drawdowns, helped ease immediate supply shortage fears and reduce the severe imbalances that emerged at the beginning of the crisis.

The US dollar posted limited gains on Thursday but remained below its six-week high, as growing optimism that Washington is nearing an agreement with Tehran to end the war in the Middle East capped further advances in the US currency.

US President Donald Trump said on Wednesday that negotiations with Iran had entered their final stages, while also warning that additional strikes could be launched if Tehran refuses to agree to a deal.

The dollar, considered a safe-haven asset by investors, rose 0.1% against the Japanese yen to 159.06 yen after recording its first decline versus the Japanese currency in eight sessions on Wednesday.

The yen also received additional support after hawkish comments from Bank of Japan board member Junko Koeda, who said the central bank needs to continue raising interest rates as underlying inflation stabilizes near the 2% target.

Meanwhile, the euro fell 0.2% to $1.16005 after dropping on Wednesday to its weakest level since April 7 at $1.1583 before rebounding.

Pressure on the European currency intensified after data showed French economic activity contracted in May at the fastest pace in five and a half years.

“The French PMI data was extremely weak, but the European Central Bank still appears determined to raise rates,” said Kenneth Broux, Head of FX and Rates Research at Société Générale, explaining the euro’s weakness.

Traders are also awaiting the release of the eurozone composite PMI data later today.

The British pound also slipped 0.1% to $1.3421.

The US Dollar Index, which measures the greenback against a basket of major currencies, rose 0.2% to 99.295 points, though it remained below Wednesday’s peak of 99.472 points, the strongest level since April 7.

Joseph Capurso, Head of International and Sustainable Economics at Commonwealth Bank of Australia, said “safe-haven flows reversed following positive news regarding the war with Iran.”

However, he added that the United States could still resort to military escalation to strengthen its negotiating position, despite domestic political incentives pushing toward peace.

Investors remain focused on the inflationary impact of higher energy prices as the Strait of Hormuz continues to face partial shipping disruptions.

Currency analysts at Commerzbank said some central banks may view the current inflation shock as “temporary” if the strait reopens in the coming days, but warned that such an assessment would be flawed because it overlooks the decline in purchasing power.

They added that currencies could benefit in countries where central banks are slower to label rising prices as temporary, while the possibility of tighter monetary policy remains in place.

Minutes from the Federal Reserve’s April meeting, released Wednesday, also showed growing concern among policymakers regarding inflation, with a larger number of officials becoming open to the possibility that further interest rate hikes may be necessary.

In other markets, the Australian dollar declined after an unexpected rise in unemployment to the highest level since 2021, reducing expectations for additional rate hikes from the Reserve Bank of Australia.

The Australian dollar fell 0.55% to $0.71105 after traders scaled back expectations for further monetary tightening this year.

Ryan Wells, economist at Westpac, said expectations for rates to remain unchanged at the June meeting are now “high conviction,” though he noted that inflation remains the central bank’s biggest challenge.