Copper prices climbed to a fresh record high on Monday, supported by speculative buying and following news of a zero-fee processing deal involving a Chinese smelter, which underscored mine disruptions and the risk of supply shortages.

Benchmark three-month copper on the London Metal Exchange (LME) rose 0.6% to $11,955 per metric ton by 11:00 GMT, after touching a record high of $11,996.

Copper on the LME has surged about 36% so far this year, driven largely by concerns over mine-related issues that could lead to a supply deficit next year.

Those supply concerns were reinforced on Friday, when Reuters sources said Chilean miner Antofagasta had agreed with a Chinese smelter on zero treatment charges for copper concentrates for 2026 — the lowest level ever agreed in annual negotiations.

Treatment charges typically fall when supply is tight.

“A large part of this is about supply-side tightness, but the broader context is that markets in general look very strong, which shows there is a lot of liquidity in the system,” said Dan Smith, managing director at Commodity Market Analytics.

Global equities rose broadly on Monday, while oil prices also advanced, and gold and silver posted new record highs.

Smith added that while momentum continues to attract speculative flows into copper, there are signs that demand is beginning to soften at these elevated price levels.

“There appears to be a slowdown on the demand side. Electric vehicle sales are no longer growing strongly, and there is emerging weakness on the consumer side of the Chinese economy,” he said.

The most-traded copper contract on the Shanghai Futures Exchange (SHFE) closed the daytime session up 1.7% at 94,320 yuan ($13,397.92) per ton.

Nickel was the top performer on the LME, rising 1.6% to $15,040 per ton, following reports last week that the country plans to cut mine output in 2026.

Nickel on the Shanghai exchange rose for a fourth consecutive session, reaching its highest level in more than a month at 121,360 yuan.

Among other metals, aluminum on the LME gained 0.6% to $2,961.50 per ton, its strongest level since May 2022, while zinc rose 0.4% to $3,084. By contrast, lead fell 0.4% to $1,977, and tin slipped 0.5% to $43,030.

Bitcoin edged slightly higher on Monday, holding near the $89,000 level after posting a weekly loss, as broader markets showed improved risk appetite amid growing expectations that the Federal Reserve will cut interest rates in 2026.

The world’s largest cryptocurrency was trading at $89,089.92 as of 02:25 AM US Eastern Time (07:25 GMT). Bitcoin fell about 2% last week and has continued to move within tight ranges amid weak liquidity.

Bitcoin has struggled to regain momentum, failing to decisively break above the key psychological $90,000 level, as traders point to reduced demand from institutional investment vehicles and a more cautious positioning ahead of the year-end holiday period.

By contrast, risk appetite improved across other markets. Gold prices surged to fresh record highs on Monday, supported by strong demand as expectations grew that the Federal Reserve will cut interest rates next year following weaker-than-expected inflation data.

Global equity markets also posted gains, with Asian stocks opening higher alongside advances in US futures, as investors anticipated improved liquidity and the potential for a year-end rally.

Analysts noted that slowing exchange-traded fund (ETF) flows and mixed sentiment toward digital assets remain key factors keeping the cryptocurrency market range-bound.

In a related development, Bloomberg reported that Hong Kong’s insurance regulator is proposing new rules that could allow insurers to allocate capital to assets including cryptocurrencies and infrastructure, as part of efforts to direct funding toward government-priority sectors. Under the proposal, the Insurance Authority would apply a 100% risk weight to crypto assets, while stablecoin investments would be subject to risk weights based on the underlying fiat currency, according to a presentation dated December 4 reviewed by Bloomberg.

As for altcoins, most remained range-bound on Monday. Ethereum, the world’s second-largest cryptocurrency, rose 1.7% to $3,032.92, while XRP was largely unchanged at $1.92. Solana and Cardano posted modest gains, while Polygon fell 2.1%.

Oil prices rose on Monday after officials said the United States had intercepted an oil tanker in international waters off the coast of Venezuela, raising concerns over potential supply disruptions.

Brent crude futures climbed 52 cents, or 0.86%, to $60.99 per barrel, while US West Texas Intermediate crude rose 50 cents, or 0.88%, to $57.02 per barrel.

June Goh, senior oil market analyst at Sparta Commodities, said the market is beginning to realize that the Trump administration is adopting a tougher stance toward Venezuelan oil trade. Venezuelan crude accounts for about 1% of global supply.

Goh added that oil prices have received support from these geopolitical developments, alongside ongoing tensions between Russia and Ukraine in the background, despite a market with clearly bearish underlying fundamentals.

US officials told Reuters on Sunday that the US Coast Guard is pursuing an oil tanker in international waters near Venezuela, in what would be the second such operation over the weekend and the third in less than two weeks if successful.

Tony Sycamore, market analyst at IG, said the rebound in oil prices was driven by President Donald Trump’s announcement of a “full and comprehensive blockade” on sanctioned Venezuelan oil tankers and subsequent developments, in addition to reports of a Ukrainian drone strike targeting a vessel within Russia’s so-called “shadow fleet” in the Mediterranean Sea.

Both Brent and WTI crude fell by about 1% last week.

In a related development, US special envoy Steve Witkoff said on Sunday that talks held over the past three days in Florida between officials from the United States, Europe, and Ukraine, as part of efforts to end Russia’s war on Ukraine, focused on aligning positions. He added that those meetings, along with separate talks with Russian negotiators, were productive.

However, Russian President Vladimir Putin’s chief foreign policy adviser said that amendments introduced by Europe and Ukraine to US proposals did not improve the prospects for reaching peace.

A bleak year for the US dollar is drawing to a close with signs of stabilization, but many investors believe the currency’s decline will resume next year as global growth improves and the Federal Reserve moves further toward monetary easing.

The US dollar has fallen by about 9% this year against a basket of currencies (DXY), heading for its worst annual performance in eight years. The decline has been driven by expectations of interest rate cuts by the Federal Reserve, narrowing interest rate differentials with other major currencies, as well as rising concerns over US fiscal deficits and political uncertainty.

Investors widely expect the dollar to remain weak, as other major central banks keep policy steady or tighten, and as a new Federal Reserve chair takes office — a change that is expected to signal a more dovish tilt in the central bank’s stance.

The dollar typically weakens when the Federal Reserve cuts interest rates, as lower US rates make dollar-denominated assets less attractive to investors, reducing demand for the currency.

“The reality is that we still have an overvalued US dollar from a fundamental perspective,” said Karl Schamotta, chief market strategist at global corporate payments firm Corpay.

Determining the dollar’s path is critically important for investors, given the currency’s central role in the global financial system. A weaker dollar boosts profits for US multinationals by increasing the value of overseas revenues when converted back into dollars, and also enhances the appeal of international markets by adding a currency tailwind alongside underlying asset performance.

Despite the dollar’s recovery in recent months — with the dollar index rising by nearly 2% from its September lows — currency strategists have largely maintained forecasts for a weaker dollar in 2026, according to a Reuters poll conducted between November 28 and December 3.

The dollar’s broad real effective exchange rate — its value against a wide basket of foreign currencies adjusted for inflation — stood at 108.7 in October, only slightly below its record peak of 115.1 in January, indicating that the US currency remains overvalued, according to data from the Bank for International Settlements.

Global growth

Expectations of a weaker dollar hinge on convergence in global growth rates, with the US expected to lose some of its growth advantage as other major economies gain momentum.

“I think what’s different this time is that the rest of the world is going to grow at a faster pace next year,” said Anojit Sarin, portfolio manager at Brandes Global.

Investors expect fiscal stimulus in Germany, policy support in China, and improving growth trajectories in the euro area to erode the US growth premium that has supported the dollar in recent years.

“When the rest of the world starts to look better from a growth perspective, that tends to be supportive of continued dollar weakness,” said Paresh Upadhyaya, head of fixed income and currency strategy at Amundi, Europe’s largest asset manager.

Even investors who believe the worst of the dollar’s decline may be over say that any significant hit to US growth could pressure the currency.

“If there are any signs of weakness at any point next year, that could be bad for markets, but it would certainly weigh on the dollar as well,” said Jack Hare, investment analyst at mutual fund firm Guidestone Funds, who does not expect a major further dollar decline as a base case in 2026.

Diverging central bank policies

Expectations that the Federal Reserve will continue cutting interest rates, while other major central banks hold rates steady or raise them, could add further pressure on the dollar.

The deeply divided Federal Reserve cut interest rates in December, with the median of policymakers’ projections pointing to an additional quarter-point cut next year.

As Jerome Powell prepares to step aside ahead of the appointment of a new Fed chair by President Donald Trump, markets may price in a more dovish central bank stance next year, amid Trump’s pressure for lower interest rates.

Several leading and widely discussed candidates for the role — including White House economic adviser Kevin Hassett, former Fed governor Kevin Warsh, and current governor Chris Waller — have argued that interest rates should be lower than current levels.

“Even though the market is expecting limited movement from the Federal Reserve next year, we think the broader trend points toward weaker growth and weaker employment,” said Erik Merlis, co-head of global markets at Citizens in Boston, explaining why they are positioned short the dollar against G10 currencies.

By contrast, traders believe the European Central Bank will keep interest rates steady in 2026, although a rate hike is not completely off the table. The ECB left rates unchanged at its December meeting and revised some of its growth and inflation forecasts higher.

Not a straight line

Despite the longer-term outlook favoring a weaker dollar, investors cautioned against ruling out a near-term rebound.

Continued enthusiasm around artificial intelligence, and the resulting capital flows into US equities, could provide temporary support for the dollar.

In addition, support for US growth from the reopening of the government following this year’s shutdown, along with tax cuts enacted this year, could lift the dollar in the first quarter, according to Sarin of Brandes.

“But we tend to think that won’t be a sustainable driver for the dollar over the course of the year,” he added.