Copper and gold analysis: Supply disruptions and dollar weakness support metals prices

• Copper analysis: Prices remain supported as supply disruptions and a weaker dollar fuel momentum
• LME copper prices close in on 2024 record as production outages at major mines tighten the market
• Other metals also shine with gold closing in on $4K and silver edges closer to $50

 

Copper Regains Shine After July’s Shock Drop

 

US copper prices have made a decent comeback in recent months, kicking off October with renewed momentum after the sharp slump seen at the end of July. That decline came after Trump’s unexpected move to exclude raw copper materials (which includes copper ore and refined copper) from tariffs. Prior to that decision, US copper imports and prices had surged above global benchmarks, swelling COMEX inventories to their highest levels in over two decades. But as the market digested that shock, traders began quietly accumulating copper again. The combination of reduced speculative pressure and renewed physical demand has lifted London copper futures close to their record high from May last year of just shy of $10,915 per tonne. In this copper analysis article, we highlight reasons why prices could be moving even higher.

 

Supply disruptions keep copper supported

 

Like crude oil, copper’s price story often boils down to supply, and recent events have reinforced that narrative. Disruptions at Indonesia’s Grasberg mine, the world’s second-largest copper operation, triggered a force majeure declaration by Freeport-McMoRan after underground tunnels were flooded by mud. Sadly, all five workers initially missing have now been confirmed deceased, and the company has since slashed production guidance for the remainder of the year.

 

This tragic event, combined with ongoing tightness at other major copper-producing sites, has injected a firm floor under prices. With US inventories still elevated yet tightening slowly, traders appear confident that near-term supply constraints could offset that.

 

Copper takes cues from gold and the weaker dollar

 

It’s not just copper enjoying the rally — metals across the board have caught a bid. Gold has surged to new highs today, edging towards the $4,000 level, while silver is within striking distance of its 2011 peak near $50. The common thread? A broad commodities uptrend, fuelled by macro uncertainty, a weaker dollar, and persistent demand for hard assets.

 

Gold’s breakout above yet another round handle is simply fuelling the bullish momentum given the lack of any major selling activity. It looks like gold could now test the next big level of $4,000, with $3,900 broken. 

 

 

The strength of gold so far this year is not simply the product of speculation; it is driven by several overlapping trends that have proved resilient throughout the year. Many of these factors may well remain relevant in the latter stages of this year, keeping the outlook positive.

 

On major source of support for gold has been central bank demand, driven by haven demand and persistent concerns about inflation eroding the purchasing power of fiat currencies globally.

 

With conflicts persisting in Europe and the Middle East, and with US–China relations still strained, many central banks probably view gold as an essential hedge against geopolitical risk.

 

There is little doubt that gold’s gains have been accelerated because of a weaker US dollar. The greenback has endured one of its poorest years since the early 2000s, with the more recent losses coming in because of the government shutdown. Obviously today the euro is lower on the back of the shock resignation of the French Prime Minister, and the yen has taken a drop on the back of the Japanese election, both of which has provided a respite for the dollar. But I don't see the greenback bouncing back materially without the shutdown ending or data showing significant improvement.

 

 

 

So, the weaker dollar, stagflation and a broader sense that America’s economic dominance is being challenged are all helping to fuel the rally on gold. On top of all this you have the Federal Reserve cutting interest rates again, making non-interest-bearing assets such as gold relatively more appealing. This is also helping support copper and other metals’ prices.

 

Copper technical analysis

 

From a technical perspective, copper’s chart has turned decisively bullish. The 21-day EMA has crossed back above the 200-day SMA, signalling a clear trend reversal. That crossover reinforces the idea that the recent rally is more than just a short-term bounce.

 

 

Key support now rests near the $5.00 level, which not only marks a reclaimed psychological barrier but also coincides with prior resistance. As long as prices hold above that threshold, dip-buying remains the preferred strategy. On the upside, the next targets sit around $5.480 — the last major breakdown zone from July — followed by $5.598 and ultimately $5.800, with the round $6.000 level as the next big psychological milestone.

 

Long-term copper analysis: Electrification keeps outlook positive

 

Looking further ahead, our copper analysis suggests the macro backdrop remains solidly bullish. The global electrification push – from electric vehicles to renewable power grids – continues to underpin long-term demand. Copper’s essential role in electrical wiring, energy storage, construction, and green technologies means its strategic importance will only grow.

 

As the transition away from fossil fuels accelerates, the world will need significantly more copper. Whether for EV motors, charging infrastructure, or solar panel networks, copper is the lifeblood of the clean energy economy. That structural demand, combined with tightening mine supply, supports the case that copper’s current uptrend may just be the beginning of another major bull phase.

 

 

Source for all charts used in this article: TradingView.com

 

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R