Copper price back bellow 8,000 as hawkish Fed outweighs supply risk
The copper price fell on Monday as a hawkish Federal Reserve crimped the outlook for demand, outweighing supply risks.
Federal Reserve Chair Jerome Powell signaled higher-for-longer interest rates to curb inflation at the Fed’s Jackson Hole symposium on Friday, sparking broad declines across financial assets.
The worsening sentiment on copper demand took precedence over further signs that supply is under threat, with Codelco becoming the latest major producer to cut output guidance.
Copper for delivery in December fell 3.5% on the Comex market in New York, touching $3.56 per pound ($7,832 per tonne).
“Restoring price stability will likely require maintaining a restrictive policy stance for some time,” Powell said Friday in remarks at the Kansas City Fed’s annual policy forum in Jackson Hole, Wyoming.
“The historical record cautions strongly against prematurely loosening policy.”
“The recession fears are still there in the background,” said WisdomTree commodity strategist Nitesh Shah in a note.
“As long as supply is being destroyed by the energy crisis at a faster rate than demand is being destroyed by hawkish policies of central banks, that could really tighten the fundamentals for base metals,” Shah said.
