Copper prices rose during Thursday’s trading session amid growing concerns over global supply due to the Iran conflict and broader Middle East tensions, prompting several major financial institutions to raise their outlook for the industrial metal.

Developing new copper mines takes more than a decade, while the number of new mining projects continues to shrink. As a result, any supply shortfall can only be addressed through higher prices and, eventually, by substituting aluminum for copper in lower-value applications.

Front-month US copper futures are currently trading around $6.53 per pound, close to the record high reached last month.

The report noted that US copper prices continue to trade at a premium to global markets due to US tariff policies. Three-month copper on the London Metal Exchange is trading near $13,600 per metric ton, implying a premium of roughly 6% in the US market.

The United States is expected to make a final decision on copper import tariffs by the end of July, although markets have already begun pricing in the potential outcome.

Citigroup and Goldman Sachs raise copper forecasts

Citigroup has turned bullish on copper, saying uncertainty surrounding US tariff policy, combined with hopes for the reopening of the Strait of Hormuz this summer, is likely to push copper prices higher.

The bank’s analysts expect copper to reach $15,000 per metric ton within the next year.

Citigroup analysts said: “We expect continued strategic ambiguity from US policymakers rather than a clear and definitive announcement on tariffs. We believe the administration will not impose tariffs on refined copper, but it is unlikely to state that explicitly, in order to encourage the continued accumulation of excess copper inventories within the United States.”

Similarly, Goldman Sachs on Monday raised its year-end copper price target to $13,735 per metric ton from a previous forecast of $12,465.

The Iran conflict and supply risks

At the start of the Iran conflict, there were concerns that higher oil prices and geopolitical tensions would weaken copper demand. So far, however, that scenario has not materialized.

The report warns of a new risk facing the copper market: sulfur shortages. A significant portion of global sulfur supplies is shipped through the Strait of Hormuz, which remains closed.

Sulfur is a critical input in copper production. Without it, production costs rise rapidly, pushing prices higher and potentially slowing mine output.

Morgan Stanley also sees copper reaching $15,000

Morgan Stanley has likewise forecast copper reaching $15,000 per metric ton, noting that the metal is already trading near record highs while net long positions on the US COMEX exchange have climbed to record levels.

The bank said: “Although copper is already trading near all-time highs and net long positions on COMEX have reached record levels, we believe any pullbacks will be short-lived due to escalating supply disruptions, continued strength in US imports, and signs that China is once again rebuilding inventories during price declines.”

Morgan Stanley added that the upcoming US tariff decision remains the key market driver. However, the current price spread between COMEX and the London Metal Exchange is already encouraging copper flows into the United States.

The bank noted that if Washington ultimately decides to increase tariffs, the rally could accelerate even further.

Most cryptocurrencies declined during Thursday's trading session as risk appetite continued to deteriorate across global markets due to ongoing uncertainty surrounding the Iran conflict.

In trading, Bitcoin fell 5% to $63.7 thousand as of 13:52 GMT on CoinMarketCap.

The Iran conflict remains a major source of uncertainty

Israel and Lebanon said late Wednesday that they had agreed to implement a ceasefire, raising hopes for a potential agreement between Washington and Tehran. Iran had partially linked any agreement to an end to the fighting between Israel and the Iran-backed Hezbollah movement in Lebanon.

John Evans, analyst at PVM Oil, said Iran continues to insist on ending what it describes as Israeli aggression against Lebanon, particularly against Hezbollah, adding that there are already signs of a breakthrough.

Lebanese President Joseph Aoun said on Thursday that the ceasefire would take effect within 24 hours of receiving approval from all relevant parties.

US President Donald Trump also hinted on Wednesday that progress in negotiations with Iran could be achieved as early as this weekend.

Iranian Foreign Minister Abbas Araghchi said on Wednesday that communication between Tehran and Washington has not been cut off, but acknowledged that no progress has been made in the negotiations, adding that both sides are reviewing the texts that have been exchanged.

In the United States, the Republican-controlled House of Representatives approved a resolution on Wednesday aimed at preventing Trump from continuing the war against Iran. For the measure to take effect, it must also pass the Senate and secure a two-thirds majority in both chambers to override an expected presidential veto.

Economic data

On the economic front, a survey released Wednesday showed that the prices-paid component of the US services sector surged to its highest level in nearly four years last month, reinforcing economists' expectations that the Federal Reserve will keep interest rates unchanged until next year.

The US dollar traded near its highest level in two months on Thursday as renewed conflict in the Gulf region weighed on risk appetite, while investors remained alert to the possibility of Japanese intervention as the yen hovered near the key 160-per-dollar level.

Renewed attacks

Iranian attacks on Kuwait on Wednesday damaged Kuwait International Airport and left dozens injured, while the US military carried out strikes near the Strait of Hormuz, further complicating prospects for a diplomatic resolution to the conflict.

Although Israel and Lebanon reached a ceasefire agreement, a broader peace deal remains elusive, keeping oil prices elevated and supporting demand for the US dollar as a safe-haven asset.

The euro rose 0.1% to $1.161, while a Reuters poll showed the European Central Bank is expected to raise its deposit rate to 2.25% on June 11 in an effort to contain inflation. The British pound also gained 0.1% to $1.343.

The US Dollar Index, which measures the greenback against a basket of major currencies, was little changed at 99.46, remaining close to the two-month high of 99.56 reached in the previous session.

Francesco Pesole, currency strategist at ING, said it is difficult to argue against the dollar’s strength at the moment.

He added that economic data continue to portray a resilient US economy, while the latest exchange of military strikes between the United States and Iran has pushed global markets toward a risk-off stance.

The Australian dollar, which is sensitive to risk sentiment, was steady at $0.713 after data showed Australia’s goods trade balance returned to surplus in April.

Economic data

On the economic front, a survey released Wednesday showed that the prices-paid component of the US services sector jumped to its highest level in nearly four years last month, reinforcing expectations that the Federal Reserve may keep interest rates unchanged until next year.

The yen and intervention risks

The Japanese yen traded at 159.89 per dollar, recovering from Wednesday’s low after briefly breaking above the 160 level for the first time since April 30, prompting verbal warnings from Japanese officials.

The 160 level is widely viewed by markets as a red line that could trigger official intervention to support the Japanese currency.

Meanwhile, Bank of Japan Governor Kazuo Ueda strengthened expectations of a June rate hike through a noticeably more hawkish tone on inflation. Rising energy costs linked to the Iran conflict have increased upside inflation risks and opened the door to more frequent increases in borrowing costs.

Naohiko Baba, Head of Japan Research and Chief Japan Economist at Barclays, wrote that the central bank’s hawkish stance has become more pronounced, including explicit concern about the risk of falling behind the inflation curve, while maintaining the bank’s expectation of a rate hike in June.

Gold prices climbed more than 1% in European trading on Thursday and are on track for their second gain in three sessions, supported by a weaker US dollar and lower oil prices. The move comes after a ceasefire agreement was reached in southern Lebanon, reinforcing expectations that the United States and Iran may be moving closer to a broader peace deal.

If oil prices continue to decline, inflationary pressures on Federal Reserve policymakers are likely to ease, reducing the probability of a US interest rate hike in December.

Price overview

• Gold rose 1.1% to $4,484.08, up from an opening level of $4,434.81. The session low was $4,424.23.

• At Wednesday’s settlement, gold fell 1.2% as renewed military tensions in the Gulf region boosted demand for safe-haven assets. The metal had gained 0.1% in the previous session.

US dollar

The US Dollar Index fell 0.2% on Thursday, pulling back from a two-month high of 99.55 and heading toward its first loss in four sessions, reflecting weakness in the US currency against a basket of major and minor currencies.

In addition to profit-taking, the dollar came under pressure as risk sentiment improved following the announcement of a US-brokered ceasefire agreement between Hezbollah and Israel.

Global oil prices

Oil prices declined more than 2.0% on Thursday, retreating from their highest levels in nearly two weeks and heading for their first daily loss in four sessions.

The decline reflects growing optimism that the United States and Iran could reach a peace agreement that includes reopening the Strait of Hormuz.

Iran war developments

• The Trump administration announced late Wednesday that Israel and Lebanon had agreed to implement a ceasefire to end hostilities, boosting hopes for a broader agreement that could bring the Iran conflict to an end.

• Trump said Iran had agreed to abandon nuclear weapons, while cautioning that its position could still change. He also stated that the Strait of Hormuz would reopen “immediately” once Iran signs the agreement memorandum.

• The Republican-controlled US House of Representatives approved a resolution on Wednesday aimed at preventing President Donald Trump from continuing the war against Iran.

US interest rates

• New York Federal Reserve President John Williams said he does not expect inflation risks stemming from the Middle East conflict to be long-lasting and reiterated that there is currently no need to alter the course of monetary policy.

• According to CME’s FedWatch Tool, the probability of a Federal Reserve rate hike at the December meeting declined from 59% to 55%.

• Markets continue to price a 96% probability that rates will remain unchanged at the June meeting, while the probability of a 25-basis-point rate cut stands at 4%.

• Investors continue to monitor incoming US economic data and comments from Federal Reserve officials in order to reassess rate expectations.

• Weekly jobless claims data are due later on Thursday, while the US nonfarm payrolls report for May will be released on Friday.

Gold outlook

Tim Waterer, Chief Market Analyst at KCM Trade, said gold remains heavily influenced by movements in the US dollar and oil prices, as the precious metal tends to benefit when both decline. He added that sustaining the current upward momentum will depend on continued positive developments in US-Iran relations.

Matt Simpson, Senior Market Analyst at StoneX, said he does not believe the broader bull market has ended, but noted that a market-wide correction appears necessary. He expects significant volatility throughout the remainder of the year, while maintaining a bullish bias that could push gold toward the $5,000 level by year-end.

SPDR Gold Trust

Holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, declined by 1.14 metric tons on Wednesday, marking a fifth consecutive daily reduction. Total holdings fell to 1,026.86 metric tons, the lowest level since October 15, 2025.