Copper loses ground on stronger dollar, tariff uncertainty
Copper prices fell on Tuesday as the dollar gained ground against most major rivals amid uncertainty about Trump’s EU tariffs.
An analysis released today from Economies.com showed copper price failed to surpass $4.8100, leading to profit-taking and sending the price to $4.7400.
Copper prices are expected to waver in upcoming trading as investors assess global demand developments, especially in China, and US monetary policy changes.
US President Donald Trump said he decided to delay the timing of his 50% EU tariffs until July 9.
It came after a request from European Commission President Ursula von der Leyen to give negotiators more time to reach a deal.
On copper in particular, Trump has strongly hinted at a 25% tariff on copper imports in February, leading to accelerated shipments to the US, and sending US prices to a record $11,633 a ton in March, which is $1570 higher than London prices.
The Impact on European Industry
US tariffs threaten EU plans to bolster its strategic minerals independence, which aim at expanding mining of critical minerals such as cobalt, lithium, and nickel among other minerals, but US tariffs on aluminum and potentially copper would compromise such efforts and send the surplus inside European markets, flooding local industries.
Future Outlook
Copper prices are expected to waver amid ongoing US-EU trade tensions, with global copper demand expected to outstrip supplies by 30% by 2035 due to the shift to clean energy, which would likely raise prices in the long term.
Separately, the dollar index rose 0.3% as of 15:06 GMT to 99.4, with a session-high at 99.4, and a low at 98.7.
On trading, copper July futures fell 1.3% as of 15:02 GMT to $4.77 a pound.
US dollar tries to recover from five-week trough
The US dollar rose in European trade on Tuesday for the first time in three sessions against a basket of major rivals, as it tries to recover from five-week lows on short-covering.
Now traders await important US data later today to assess the odds of future Fed rate cuts.
The Index
The dollar index rose 0.5% to 99.44, with a session-low at 98.78.
On Monday, the index lost 0.2%, plumbing a five-week trough at 98.69 on US debt concerns.
US Rates
According to the Fedwatch tool, the odds of a June 0.25% interest rate cut by the Federal Reserve stood at just 6%.
The odds of a July rate cut stood at 25%.
Markets now expect 50 basis points of total rate cuts by the end of the year, starting October.
Analysts point to persistent concerns about future US government deficits as a major factor behind the weakness of the dollar as investors flee US assets.
Gold backs off two-week high as dollar rebounds
Gold prices fell in European trade on Tuesday on track for the second loss in a row, backing off two-week highs on profit-taking as the dollar rebounded against major rivals.
Traders now await important US data later today to gather more clues on the odds of Fed rate cuts this year.
The Price
Gold prices fell 1.5% today to $3292 an ounce, with a session-high at $3350.
On Monday, gold lost 0.5% on profit-taking away from a two-week high at $3365.
US Dollar
The dollar index rose over 0.45% on Tuesday, on track for the first profit in three days away from a five-week trough at 98.69 against a basket of major rivals.
A stronger dollar makes the greenback-denominated commodity futures costlier to holders of other currencies.
The dollar has rebounded as concerns about a US recession receded with Trump putting off EU tariffs until July 9.
US Rates
According to the Fedwatch tool, the odds of a June 0.25% interest rate cut by the Federal Reserve stood at just 6%.
The odds of a July rate cut stood at 25%.
Markets now expect 50 basis points of total rate cuts by the end of the year, starting October.
SPDR
Gold holdings at the SPDR Gold Trust remained unchanged yesterday at 922.46 tons.
Euro hovers near four-week high after Lagarde's remarks
The euro rose in European trade on Tuesday on track for the third straight session against the US dollar, and about to hit a four-week high amid concerns about US financial stability.
Recent bullish remarks by European Central Bank President Christine Lagarde provided more positive momentum for the euro, and underscored investor confidence in the EU.
The Price
The EUR/USD price rose 0.25% to $1.1407, with a session-low at $1.1381.
The pair rose 0.2% on Monday, the second profit in a row, hitting a four-week high at $1.1419, as Trump delayed imposing 50% tariffs on the EU until July 9.
Lagarde
ECB President Christine Lagarde said the euro could be an alternative to the dollar, which would bring about great benefits to the 20-country bloc if governments managed to bolster its financial and security structures.
Lagarde said that ongoing changes open the door to what is called “euro’s global moment”, but it’ll have to earn it.
She said that boosting the euro’s global role would simultaneously require a boost to European military power to underpin the continent’s ability to support its partners and strategic alliances.
Lagarde added that official investors don’t only look for economic stability but also for geopolitical guarantees, and they tend to invest in assets of countries that are considered highly trusted security partners.
She called for making the euro the favored currency in pricing international trade bills, through accelerating new trade deals and boosting liquidity deals with the ECB.
European Rates
Recent eurozone data showed inflation rose past estimates in April, renewing pressures on the European Central Bank’s policymakers.
Following the data, the odds of an ECB rate cut in June fell from 60% to 50%.