Copper approaches historic highs

The metals market resumed growth in early August, with the industrial sector supported by declining inventories and limited supply. Copper rose again above $6.60 per pound and approached all-time highs, while gold, silver, and platinum also strengthened, according to Alpari analyst Anna Bodrova.

According to the analyst, investor sentiment improved following reports of a possible agreement between the US and Iran to open the Strait of Hormuz. This reduced fears of a new round of inflation and dampened expectations of tighter Federal Reserve policy.

Gold is holding near $4,100 per ounce, while silver is trading above $59.50 per ounce. Both precious metals are recovering for the second consecutive day. Lower oil prices amid progress in negotiations around the Strait of Hormuz have reduced expectations for a Fed rate hike in September. According to the data, the probability of such a decision has fallen to approximately 57%, down from 67% the day before.

Meanwhile, market participants are still drawing definitive conclusions regarding the US central bank's future policy.

Fed officials have stated their readiness to raise rates if inflationary pressures intensify. Investors will soon focus on new US employment data, which could influence expectations regarding the Fed's future policy decisions.

Platinum remains one of the strongest precious metals assets. Its price remains above $1,700 per ounce, near a seven-week high. Both improving market sentiment and fundamental factors are supporting prices.

The world's largest platinum producer, Valterra Platinum, reported a significant increase in profits and expects further demand for the metal amid the development of artificial intelligence infrastructure. However, according to an analyst, the global platinum market remains in short supply, which is supporting prices.

Copper has demonstrated the most notable performance among industrial metals. Its prices have once again exceeded $6.6 per pound and are approaching all-time highs. A major driver of this growth was the decline in global inventories.

In anticipation of the US administration's decision on possible import tariffs, traders are actively redirecting copper supplies to the American market. In July, the US received over 200,000 tons of the metal—the highest monthly volume in more than ten years.

At the same time, copper inventories at London Metal Exchange warehouses fell to a five-month low.

Some of the metal was sent to China to cover a local deficit. Long-term demand for copper is further supported by the development of artificial intelligence, data center construction, and the global energy transition.

Aluminum prices also continued to rise. They rose above $3,210 per ton, reaching a nearly six-month high. Supply constraints remain the main supportive factor.

Aluminum production outside China fell by almost 7% in July, and metal inventories at London Metal Exchange warehouses fell to their lowest level on record. Production restrictions in China and lower production forecasts from major producers are adding pressure on supply. Some new production capacity is expected to return to service by the end of the year, but the current market balance remains tense.

Overall, according to an Alpari analyst, the metals market is gradually shifting focus from geopolitical risks to the fundamental balance of supply and demand. Softer inflation expectations are supporting precious metals, but industrial metals are becoming the main market drivers.

Declining inventories, a structural supply shortage, and robust demand from energy, infrastructure, and artificial intelligence technologies are creating the basis for continued high metal prices in the second half of the year.