Copper Crumbles Under Fed Bets and AI Downturn

Copper prices have taken a hit as investors weigh in on the latest Federal Reserve rate expectations and growing doubts about the impact of artificial intelligence spending on metal demand.

The US dollar's strength, combined with rising Fed rate bets, has put pressure on copper prices. According to Reuters, benchmark three-month copper on the London Metal Exchange (LME) slipped to $13,667 a metric ton, while the most-traded contract on China's Shanghai Futures Exchange (SHFE) also dipped.

The market is currently pricing in a 76% probability of a September rate hike by the Fed, which could further cool growth expectations. As interest rates rise, it becomes more expensive to finance and store inventory, making copper prices more sensitive to rate and currency shifts.