Copper prices hit seven-week low amid market shifts and AI trade doubts

Copper prices dropped to a seven-week low as traders weighed the artificial-intelligence trade and possible diplomacy in the Middle East. The red metal fell 2.2 percent on the London Metal Exchange to end at $14,036 a metric ton on Tuesday, which marks the lowest level since Sept. 14. Comex copper dropped 2.5 percent to close at $6.4020 a pound. Oil prices dropped following unconfirmed reports of progress in peace talks regarding the US-Iran conflict. This pushed bond yields and the dollar higher, which put pressure on metals priced in the US currency like copper. Concerns about spending on artificial intelligence have also hurt equities recently and raised worries about global economic growth and metals demand. South Korea's tech stock market faced pressure on Tuesday, while US equities rose due to a rebound in a key gauge of chipmakers. Analysts at RBC Capital Markets noted that the recent selloff has placed the AI demand narrative for copper under renewed scrutiny. Copper remains up about 13 percent for the year, but the Tuesday drop threatens to break prices out of the range they held for the past two months.

Context

Copper is widely used in global industry and infrastructure, making its price a key indicator of economic health and manufacturing demand. Changes in the value of the US dollar often impact metals markets because these commodities are traded in US currency globally.