Interest rate cuts could crash copper prices, analysts warn
- The price of the metal has soared to record highs this year
According to analyses, copper prices could plummet by the end of the year if the US Federal Reserve starts cutting interest rates.
The price of the metal has soared to record highs this year, reaching more than $10,000 per tonne.
But it is more likely that the price will fall to between $7,000 and $7,500 per tonne by the end of this year, Liberum analysts said.
Downside risk: Copper prices could plummet by the end of the year if the US Federal Reserve starts cutting interest rates, analysts say
This contrasts with consensus forecasts for the price to remain above $8,500.
Like gold, the red metal is increasingly seen as a hedge against inflation.
But Liberum argues that once inflation in the Western world comes under control and the US starts cutting interest rates, copper’s appeal is likely to wane.
The metal is also a crucial metal for the green transition and industries such as construction.
But a growing number of analysts believe that the increased need for copper during the Green Revolution has been ‘priced in’ – meaning its value is already reflected in current prices.