Copper's price surged to a brand new all-time high of $11,581.50 in Shanghai early Friday, spurred by a rare bullish call from Citigroup. Citi analysts, led by Max Layton, projected an average price of $13,000 in the second quarter, citing a significant pull of the metal into the U.S. market, which has left other regions experiencing shortages.
Traders are closely monitoring trade risks, with an increasing number of shipments heading towards American ports in anticipation of potential import tariffs, according to Jane Street.
Mercuria Moves Metal Out of LME Warehouses
The current strain on the market is evident in warehouse activity. Mercuria Energy Group Ltd. ordered approximately $500 million worth of copper to be withdrawn from London Metal Exchange storage. This represents the largest cancellation of stock in over a decade and aligns with the tightening outlook previously outlined by Citi.
Max Layton and his fellow analysts expressed strong conviction in copper's upward trajectory through 2026, supported by multiple bullish catalysts. These include an incrementally constructive fundamental and macroeconomic backdrop.
In contrast, Macquarie Group analysts, led by Peter Taylor, noted in a Thursday report that while the metal could still reach fresh highs, prices exceeding $11,000 a ton are unlikely to be sustainable due to insufficient tightness in the physical market. They highlighted a surge in exchange inventories, which climbed above 656,000 tons, the highest level since 2018. Nearly two-thirds of this inventory is held in Comex warehouses in the U.S. These observations are consistent with comments from Goldman Sachs, which indicated earlier this week that a genuine shortage is not anticipated until 2029.
Traders Track Moves in Gold, Oil, and Fed Expectations
While copper maintained its strength, gold experienced a downturn as traders secured profits and awaited next week's Federal Reserve meeting. Gold futures declined by 0.3% to $4,220.10 per ounce, and spot gold eased by 0.3% to $4,190.13.
The World Gold Council forecasts a price increase of 15% to 30% in 2026. A Reuters poll of 39 analysts and traders placed the median forecast for 2025 at $3,400 per troy ounce, an increase from $3,220 in July, with an average expectation of $4,275 for 2026.
Energy markets saw a slight increase. Brent crude traded 0.3% higher at $62.85 per barrel, and West Texas Intermediate rose 0.4% to $59.16. Traders reacted to recent Ukrainian attacks on Russian oil sites, which raised concerns about supply amidst stalled peace talks.
Interest rate expectations remained a central focus across all markets. The CME FedWatch tool indicated that traders are fully pricing in a 25-basis-point cut, which would bring the federal funds rate to the 3.75% to 4% range, with an additional cut anticipated in December.
A separate Reuters poll conducted between November 28 and December 4 found that 82% of economists expect the same 25-basis-point reduction at the upcoming meeting. Cryptopolitan anticipates that lower interest rates will stimulate economic activity and boost oil demand.