Investors have increased their bets on a rate cut by the Federal Reserve, and Goldman Sachs has warned of increasing supply pressure on copper, with prices briefly surpassing $10,000 per ton. After weak US employment data fueled speculation that the Fed will cut rates this year, metals joined a broad rebound in risk assets. Copper initially rose by 2.1%, returning to five digits after late April, but the gains retreated as trading began in the European market.
The prospect of a relaxed Federal Reserve policy has brought positive news to the copper market, with bulls expecting further price increases, while global mines are striving to meet the growing demand. Goldman Sachs has raised its year-end target price for copper from the previous $10,000 per ton to $12,000.
Goldman Sachs analysts, including Nicholas Snowdon, wrote in a report, “We continue to forecast that from 2024 onwards, metal shortages will turn into an indefinite, increasing situation. By the fourth quarter, there may be a shortage event – that is, extremely low copper inventories.”
In the US, the futures market currently shows a 54% chance of a rate cut by the Fed before the end of the year, higher than the approximately 40% at the end of April. In China, bullish sentiment has returned to the financial markets since the beginning of May, as the government has pledged to promote economic growth.
As global factory activity shows signs of recovery and signs of supply tightness emerge, especially in the supply of raw materials to smelters, copper prices rose nearly 17% in 2024. Nonetheless, skeptics have pointed out soft indicators in China, with import premiums falling and buyers holding off on purchases.
As of 3:13 PM local time, copper prices on the London Metal Exchange rose by 0.9% to $9,992.00 per ton, with all metals rising except for nickel.
