Copper Retreats From Record As Investors Await Signals From Fed

Copper retreated from an all-time high as investors turned cautious before a US Federal Reserve meeting that will be scrutinized for signs of a more hawkish stance by the bank’s policymakers.

The industrial metal fell as much as 1.7% in London. The Fed is expected to deliver a quarter-point cut to interest rates on Wednesday, but any hint at a slower pace of easing in 2026 could hurt risk assets including commodities. 

Copper – critical for electrification and the energy transition – has gained more than 30% on the London Metal Exchange this year. The rally has accelerated in recent weeks as material is rushed to the US to front-run possible import tariffs, triggering tighter supplies and record premiums elsewhere.

Swaps traders are leaning toward two further Fed cuts by the end of 2026, down from three signaled a week ago. Divisions within the central bank have become increasingly apparent as the US wrestles with still-high inflation and a lack of data following the longest government shutdown in Washington’s history.

Copper’s 14-day relative-strength index recently climbed above 70, a level which some see as pointing to excessive gains. The metal surged to a high of $11,771 a ton on Monday, fueled by concerns over supply.

Investors are also mulling implications from China’s Politburo meeting, which laid out its broad approach for the economy next year. The market reaction was more negative on Tuesday, with Chinese stocks falling after analysts including Goldman Sachs Group Inc. said the readout was weaker than expected on stimulus.

There are still few signs of Chinese demand picking up after a slump in recent months.

Chinese fabricators are struggling to pass on record-high copper costs to their buyers, and processing fees for copper rods used to make electricity wires have plunged to a record low this month of minus 300 yuan ($42) a ton, in the major market of Jiangsu province, according to data from Mysteel Global.

Copper was down 1% at $11,525.50 a ton by 11:25 a.m. local time on the LME. Aluminum and zinc also retreated.