Most base metals saw declines as traders reacted to geopolitical developments and awaited cues from Federal Reserve Chair Jerome Powell, whose statements were expected later in the week. The dollar strengthened, which typically makes dollar-denominated commodities more expensive for international buyers, contributing to the downward pressure on metals.
Separately, earlier in the day, copper prices experienced significant volatility. U.S. Comex copper futures plunged 19.5% after President Trump announced a 50% tariff on certain copper products, effective August 1st. This tariff impacted semi-finished copper goods like wires and pipes, but excluded ore, cathodes, and concentrates. This move reversed a premium that U.S. copper had held over London benchmarks, as initial assumptions that U.S. mines would benefit from tariffs proved incorrect, leading to a rapid unwinding of pre-tariff shipments.
Other precious metals also suffered losses: gold fell 1.6% to $3,272 an ounce, silver dropped 3.4% to $36.85, and platinum sank 7.4% to $1,290. The overall market sentiment was further dampened by Powell's cautious tone regarding an interest rate cut in September, dashing hopes for an imminent reduction and causing Wall Street's rate-cut bets for September to fall to 45% from 68%. The U.S. dollar index surged 1%, marking its strongest five-day gain since mid-2022, while the S&P 500 declined 0.5% and small caps underperformed.
