Copper Slips to Three-Week Low as LME Stocks Rebuild While Gold Spikes Past $4,380 After Fed Hike
Copper held near a three-week low around $14,014 a tonne after LME inventories jumped 3.6% to 242,900 tonnes and the cash contract flipped to a $67.50 discount, while gold rallied as much as 2.8% to above $4,380 an ounce after the Fed's first rate increase since 2023 and iron ore firmed on Chinese pre-holiday restocking.
Copper's tariff-driven rally has run out of momentum. Three-month copper on the LME edged up 0.10% to $14,014.50 a tonne by 0700 GMT on September 15 after touching a more than three-week low of $13,958 the previous session, and the most-traded Shanghai contract closed 1.07% lower at 107,030 yuan a tonne. The trigger was a Reuters report that the White House is hesitant to impose tariffs on refined copper. Lower prices did draw Chinese buyers back: the Yangshan premium, a gauge of import demand, rose to $100 a tonne, the highest since mid-August.
Exchange availability is clearly improving. Copper stocks in LME-registered warehouses jumped 3.59% to 242,900 tonnes, and the cash contract traded at a discount of about $67.50 a tonne to the three-month contract, a structure that is the opposite of the squeeze seen earlier in the year. ING analysts said rising inventories and softer nearby spreads suggest extreme tightness across the LME market is beginning to moderate, and warned copper could stay under pressure near term as stretched positioning unwinds, even if mine-supply constraints keep a floor under prices. COMEX stocks were little changed at 767,599 short tons. A stronger dollar and caution ahead of the Fed decision added to the headwind.
Iron ore told a similar story of restocking without demand recovery. The most-traded Dalian contract closed 0.28% higher at 710.5 yuan ($105.92) a tonne on September 17, still 4.6% below the multi-week high of 745 yuan set on September 8, while the Singapore Exchange October benchmark added 0.52% to $96.30 a tonne and stayed below $100 for six straight sessions. Daily seaborne transaction volume jumped 43% to 1.41 million tonnes as mills covered the October 1-7 National Day break. Goldman Sachs sees $90-95 as solid near-term support at current high freight rates but expects Chinese steel production and iron ore demand to soften in October-November as low-cost seaborne supply from the majors and Simandou increases. Coking coal and coke fell 1.65% and 0.63%.
Precious metals moved the other way. Spot gold rose as much as 2.8% to above $4,380 an ounce and was last up 2.5% at $4,368.91, snapping a three-day drop, while silver climbed 4.6% to $65.85. The catalyst was the slide in oil, which eased inflation concerns after the Fed's unanimous quarter-point hike on September 16 - its first since 2023 - and allowed Treasury yields to correct from what OCBC's Christopher Wong called an overreaction. Chairman Kevin Warsh's inflation rhetoric still pushed market-implied expectations to at least one more hike this year and as many as two more in 2027. UBS's Giovanni Staunovo called higher-for-longer rates a near-term headwind but said pullbacks toward $4,000 offer opportunities, with gold-backed ETFs seeing inflows for eight consecutive days.