Macquarie said the rally in copper prices remains intact, although it is becoming increasingly disconnected from underlying market fundamentals, as investor optimism continues to outpace signs of weak physical demand and a persistent global supply surplus.

Copper climbed to $6.27 per pound on Thursday, equivalent to more than $13,800 per metric ton, gaining 2.6% by midday trading in New York.

The advance was supported by lower oil prices after US President Donald Trump said Iran had returned to the negotiating table, as well as renewed US tariff threats after the Commerce Department announced plans to introduce a mechanism that would expand tariffs of up to 50% to cover a broader range of fabricated copper products by the end of fiscal 2026.

Speculation and tariff expectations continue to drive prices despite supply surplus outlook

In a new commodities report titled *Spinning Plates*, Macquarie analysts based in London, Shanghai, and Singapore argued that the copper market is not facing a supply shortage. Instead, they expect global surpluses to persist over the coming years, suggesting the world is unlikely to face a near-term shortage of the metal.

The report noted that visible copper inventories have increased by more than 870,000 metric tons since the beginning of 2025, including 444,000 tons added last year and another 429,000 tons so far in 2026.

London Metal Exchange (LME) inventories have climbed to their highest level in eight years, while COMEX inventories have reached record highs. In addition, Macquarie estimates that around 550,000 metric tons of copper are being held outside exchanges within the United States.

The bank said copper prices rose from below $12,000 per metric ton in late March to more than $14,000 by the end of May before easing slightly, adding that the rally has been driven by investment positioning, short covering, and tariff-related trade flows rather than a genuine shortage of supply.

The widening price premium between the Chicago Mercantile Exchange (CME) and the London Metal Exchange (LME) has also encouraged large volumes of copper to flow into the United States as traders position for the possibility of additional US trade measures.

Macquarie believes the most likely scenario is that continued uncertainty will keep substantial copper inventories inside the United States, creating an artificial perception of tight supply in the rest of the global market.

Chinese demand slows while sizeable surpluses are expected in coming years

The report said Chinese buyers have begun scaling back purchases at current price levels, with seasonal inventories rising sharply despite lower imports and higher exports. It also noted that the usual pace of inventory drawdowns ended earlier than normal.

Outside China, the bank described demand as still weak, with spot premiums remaining below annual contract levels.

On the supply side, Macquarie said mine production continues to disappoint expectations after the world's 17 largest copper producers cut their combined production targets by 199,000 metric tons to 13.8 million tons.

The largest disruptions came from the Kamoa-Kakula and Grasberg mines, where production recovery and expansion plans have been delayed.

Ivanhoe Mines said this week that production at its Democratic Republic of Congo operation will increase during the second half of the year, but maintained its 2026 production guidance at between 290,000 and 330,000 metric tons, well below the more than 500,000 tons expected before the May 2025 flooding.

Freeport-McMoRan had originally targeted copper production of 771,000 metric tons at Grasberg this year, but landslides disrupted operations, with the company now expecting a full recovery only by the end of 2027.

Macquarie forecasts mine supply growth of 1.3% this year and 4.4% in 2027, assuming the Cobre Panamá mine resumes operations during the second quarter of 2027 and gradually ramps up to an annual production rate of 385,000 metric tons within six months.

On the demand side, the bank lowered its 2026 global copper demand growth forecast to 1.8% from 2.0%. It also reduced its China demand growth forecast to 1.1% and cut its projection for demand growth outside China to 2.6%.

The bank expects global demand growth to improve to 2.2% in 2027 as markets outside China recover, although continued weakness in China's property sector is expected to remain a drag on consumption.

Macquarie also expressed skepticism about the scale of near-term copper demand generated by artificial intelligence projects, arguing that while data centers have boosted investor sentiment, project delays caused by local opposition, electricity grid constraints, equipment shortages, and the growing adoption of optical networking technologies could make AI-related copper demand smaller and slower than markets currently anticipate.

Despite its cautious short-term view, the bank remains constructive on copper's long-term outlook. It forecasts annual mine production growth of 2.8% between 2025 and 2030 and refined copper production growth of 2.4%, compared with demand growth of 2.8%, driven by electrification and the energy transition. That should return the market to balance by 2030 while highlighting the need for new mining projects.

In the near term, however, Macquarie believes oversupply will remain the market's biggest challenge. The bank estimates the market recorded a surplus of 600,000 metric tons last year and expects an additional surplus of 262,000 metric tons in 2026, even after accounting for production disruptions totaling 783,000 metric tons.

It also forecasts annual supply surpluses exceeding 700,000 metric tons in both 2027 and 2028.

Macquarie raised its average copper price forecast for 2026 to $13,165 per metric ton from $12,310 previously, citing strong price momentum and support from broader macroeconomic factors. Even so, it still expects prices to correct lower, forecasting a decline toward $11,000 per metric ton during the third quarter of 2027.

The bank also increased its long-term copper price forecast to $10,200 per metric ton in 2025 dollars.

The cryptocurrency market extended its recovery, with total market capitalization rising to $2.2 trillion as the latest rally resumed after a brief pause.

The advance has established a gradual uptrend since July 8, forming part of a broader recovery that began from the lows recorded in late June.

IOTA, Aave, and Zcash led the gains among the most actively traded cryptocurrencies over the past 24 hours, climbing 7.9%, 6.8%, and 6.7%, respectively.

Meanwhile, Tron, Theta Network, and Hedera ranked among the weakest performers, although their losses were relatively modest, highlighting the broad-based nature of the market's gains.

Market capitalization climbs to $2.2 trillion as Bitcoin tests $64,000

Bitcoin has returned to trade near recent local highs around $64,000, with buyers showing increasing interest whenever prices retreat toward the $62,000 area.

Analysts view Bitcoin's resilience as a constructive signal for the broader cryptocurrency market, although significant resistance levels remain overhead.

They also believe that thinner liquidity over the weekend could pave the way for a breakout above $66,000 if improving technical signals continue to attract risk-oriented investors.

Ethereum faces key resistance near $1,800

Ethereum's recovery, however, has slowed after reaching the 50-day moving average near $1,800 at the beginning of the month.

The area has become an important technical level after acting as a turning point for prices last month and serving as a major support zone in February.

ETH/USD has yet to confirm a decisive breakout from its downtrend following the rebound from June lows, as the previous support level has now turned into strong resistance.

Analysts say that holding above the 50-day moving average, currently around $1,770, would provide a bullish short-term signal, while a break above $1,800 would confirm the start of a more sustained upward trend.

Market data: Bitcoin remains below realized price as stablecoin liquidity declines

Glassnode reported that Bitcoin has traded below its realized price of $76,600 for nearly five months.

The analytics firm noted that extended periods below the realized price have occurred only a handful of times in Bitcoin's history and have often preceded the formation of long-term market bottoms.

Meanwhile, CryptoQuant said USDC reserves on Binance declined 21.6% over the past month, while Ethereum recorded unusually large one-day USDT outflows.

Analysts believe the decline in stablecoin liquidity is reducing the market's buying power and increasing the potential for higher volatility.

Separately, US Commodity Futures Trading Commission (CFTC) Chairman Michael Selig described Bitcoin as "one of the most resilient assets," noting that it has repeatedly weathered major crises and regulatory crackdowns.

He argued that Bitcoin should be treated as a commodity, similar to gold, silver, and oil, while urging the US Congress to move quickly on the proposed CLARITY Act.

In industry developments, BitGo is preparing to launch new quantum-resistant Bitcoin wallet tools for institutional clients in the coming weeks. The offering will include address risk assessments, automatic migration of funds from vulnerable wallets, and a new unspent transaction output (UTXO) selection mechanism.

Robinhood Chain DEX also recorded a milestone, reaching $564 million in trading volume just one week after launch, driven by strong demand for meme coins.

The network, built on Arbitrum's Layer 2 infrastructure, is focused on real-world assets (RWAs).

Overall, the cryptocurrency market continues to recover, with total market capitalization reaching $2.2 trillion and Bitcoin holding near $64,000. Ethereum, however, continues to face strong technical resistance around $1,800 as investors await a decisive breakout above key resistance levels.

Oil prices rose on Friday and remained on track for strong weekly gains as concerns over energy supplies persisted following renewed hostilities between the United States and Iran, which have disrupted shipping through the Strait of Hormuz.

Brent crude futures rose 60 cents, or 0.8%, to $76.90 a barrel by 11:31 GMT, while US West Texas Intermediate (WTI) crude gained 46 cents, or 0.6%, to $72.54 a barrel.

On a weekly basis, Brent is on track to gain nearly 7%, while WTI is set to rise around 6%.

"The market has pulled back from the highs reached earlier this week, but the geopolitical risk premium remains elevated because traffic through the Strait of Hormuz has nearly come to a standstill, and there is still no clear indication of when normal shipping operations will resume," said Vandana Hari, founder of Vanda Insights.

Shipping disruption in the Strait of Hormuz supports prices despite easing military escalation

The latest developments followed Iranian military strikes on Thursday targeting US military infrastructure in Gulf states in retaliation for American attacks on Iran's southern and eastern coastal provinces, adding further strain to the fragile ceasefire agreement.

In a separate development, Iranian media reported several explosions in southern Iran, including in the Bushehr area, home to one of the country's nuclear power plants.

The International Energy Agency said in a report released on Friday that the latest escalation between the United States and Iran could undermine its previous expectations of a sizeable oil market surplus next year.

The conflict has also delayed the full reopening of the Strait of Hormuz, through which around 20% of global daily oil and liquefied natural gas supplies passed before the war began on February 28.

Giovanni Staunovo, analyst at UBS, said the absence of additional US strikes on Iran overnight put some pressure on oil prices, although the continued slowdown in shipping flows through the Strait of Hormuz limited the downside.

Ship-tracking data showed that liquefied natural gas carriers continued transiting the strait in recent days, although overall daily shipping volumes remain well below normal levels.

US President Donald Trump said this week that he does not believe the war will resume, adding that "any developments that do occur will end very quickly."

"Although the United States has intensified its attacks on military targets inside Iran, markets have taken some comfort from the Trump administration's decision to avoid targeting Iran's energy infrastructure," said Daniel Hynes, Senior Commodity Strategist at ANZ.

Separately, the International Energy Agency lowered its forecast for Russian oil production, citing Ukrainian attacks on Russia's energy infrastructure that are expected to weigh on output in the coming months.

Sterling climbed to its highest level in nearly a month against the US dollar on Friday and also reached a one-year high against the euro, as investors assessed how central banks are likely to respond to higher energy prices resulting from the conflict between the United States and Iran.

The pound rose to $1.345, its highest level since June 15, before trimming some of its gains to trade about 0.1% higher.

Meanwhile, the euro slipped to 85.18 pence, its weakest level against sterling since late June 2025, before recovering to trade little changed.

Analysts said sterling's strength in recent weeks has been supported by several factors, including stronger-than-expected UK economic growth, increased foreign acquisitions of British companies, easing political uncertainty, and expectations surrounding Bank of England monetary policy.

Barry van der Laan, Head of FX Strategy at Monex Europe, said comments from Bank of England Chief Economist Huw Pill late on Thursday, indicating that interest rates would need to move higher, provided additional support for the British currency.

"Those remarks reinforced the market's view that the Bank of England has less room to ignore inflationary pressures than either the US Federal Reserve or the European Central Bank," he said.

However, he added that, in the absence of major UK economic data on Friday, sterling is likely to take its direction from movements in the US dollar, oil prices, and developments in the Middle East.

IMF upgrades UK growth outlook as political developments support sterling

The International Monetary Fund this week upgraded its forecast for UK economic growth, projecting the economy to expand by 1.0% in 2026.

The IMF said the outlook for the UK economy, which relies heavily on imported energy, had improved following the agreement reached between the United States and Iran in June and the subsequent decline in oil prices.

The fund also expects the UK to be the third-fastest growing economy in the G7 this year, behind Canada and the United States, outperforming the eurozone economies.

Even so, oil prices have risen around 5% this week following renewed exchanges of strikes between the United States and Iran, alongside Washington's decision to revoke a waiver that had allowed certain transactions involving Iranian oil.

Brent crude was last trading near $76 a barrel, although it remained well below the peak of $126 reached in April.

On the political front, former Greater Manchester Mayor Andy Burnham took a significant step toward becoming the UK's next prime minister after securing overwhelming backing from Labour Party members of Parliament on Thursday to succeed Keir Starmer.

Some analysts believe the clearer leadership outlook, together with Burnham's pledge to maintain fiscal discipline, has provided modest support for sterling. However, they cautioned that UK financial markets could become more volatile once he begins outlining the details of his economic agenda.