Copper price forecast as the rally gains steam

Like most other assets, copper has had a wild 2025 as it hit a fresh all-time high in late March before plunging by about 25% less than two weeks later. Even so, it is still up 25% year-to-date. 

On Thursday, copper price extended its previous gains as a tight supply outlook continues to boost the red metal. Over the past two weeks, COMEX copper futures have rallied by over 7% to trade at a three-month high of $5.14 per pound earlier in the day. At the time of writing, the prices have pulled back slightly to $5.11. Supply tightness is expected to continue bolstering prices in the short term as concerns over US tariffs and a weaker US dollar heighten demand.

US buyers fuel supply tightness ahead of possible tariffs

In February, President Trump ordered the US Department of Commerce to assess the national security threat posed by copper imports, with a report needed within 270 days. While no levies have been imposed on the red metal yet, the market is betting on 25% tariffs similar to the existing ones on steel and aluminum by September. 

Notably, US buyers are already stocking up; fueling a supply crunch. Indeed, the preemptive buying has widened the gap between US and London Metal Exchange (LME) copper prices with analysts expecting the latter to hit its peak in the coming months. 

Read more: Here’s why copper price is soaring despite China property market jitters

Ready-to-ship inventories from LME are already down by 80% year-to-date to a level that is less than the world’s daily usage. This has fueled steep backwardation with the LME cash copper contract premium for the three-month futures (CMCU0-3) rebounded from $94 per tonne on Wednesday to a fresh 4-year high of $310 a tonne on Thursday. Earlier in the week, the premium was at $280 a tonne, a level last seen in 2021.

At the same time, the premium of COMEX over LME copper rose to April’s level of $1,403 per tonne. According to Goldman Sachs, the surge in US-bound shipments and subsequent supply tightness outside the top economy is set to bolster prices in London to the year’s peak at $10,050 per tonne by August. 

Notably, a weaker US dollar is further fueling the preemptive buying and subsequent supply tightness. 

The dollar index, which tracks the value of the greenback against a basket of six major currencies, has been on a downtrend; plunging further to a fresh three-year low on Thursday amid the persistent uncertainties. Similar to other dollar-priced assets, a decline in the value of the US dollar makes copper less expensive for buyers holding foreign currencies.   

COMEX copper price technical analysis

Copper price chart | Source: TradingView

On Friday, COMEX copper price extended its previous gains to a level last recorded in early April at $5.14 per pound before pulling back slightly to $5.11 as at the time of writing. With an RSI of 68, the asset is an inch away from the overbought territory. As such, a corrective pullback is likely, even as it remains on an uptrend above the 50-day EMA at $4.80. 

In the near term, the range between Friday’s intraday high of $5.14 and the support zone at $4.93 will be worth watching. The entry of more buyers may push copper price higher to a fresh three-month high of $5.25 as the bulls strive to retest the all-time high hit in late March.