The metals market witnessed an unprecedented collapse in copper prices yesterday, with prices plummeting more than 20% in a single session — marking the largest daily drop in the market’s history.
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This sharp decline followed an announcement by U.S. President Donald Trump regarding new tariffs, which initially sparked fears of widespread disruption to global trade.
However, further details revealed that the 50% tariffs would not target refined copper — the cornerstone of international copper trade — but rather semi-finished copper products, such as pipes and wires.
Initially described as a “nuclear option,” the move turned out to be less damaging than markets had feared, triggering a sudden reversal and steep decline in copper prices.
The crash wasn’t just a price correction; it marked the collapse of one of the market’s largest speculative bets, as traders had rushed to stockpile copper in U.S. warehouses ahead of the anticipated tariffs.
The price premium between the COMEX and London Metal Exchange (LME) — which had surged over 30% — evaporated within hours.
Will Gold Be Affected?
As copper tumbles, attention turns to gold, especially given the tendency of metals markets to move in interconnected patterns.
While gold does not have the same industrial demand as copper, major financial and commodity market disruptions can affect investor sentiment toward the precious metal.
The copper collapse may drive investors toward gold as a safe haven, particularly if the market chaos is seen as a signal of broader economic volatility.
However, expectations that the U.S. Federal Reserve may keep interest rates high or tighten monetary policy further could strengthen the U.S. dollar, which typically puts downward pressure on gold prices.
So far, gold has not mirrored copper's trajectory, but the coming days — especially in light of U.S. monetary policy developments and global market reactions — will be critical in determining the yellow metal’s direction.
