Copper prices rise amid supply concerns and the dollar is heading for weekly gains

Copper prices rose during Friday trading, taking advantage of growing concerns about global supplies, but the gains were not enough to compensate for the losses of the previous days, leaving the red metal on track to record its worst weekly decline since last April.

The three-month standard copper price on the London Metal Exchange rose by 0.32 percent to $14,289 per metric ton by 03:00 GMT, but remained down by about 2.28 percent compared to its level at the end of last week, according to Reuters.

The supply support came after official data issued on Wednesday showed a decline in copper production in Chile, the world's largest producer of the metal, by 12.8 percent on an annual basis during August.

Supervisors at the Chilean Escondida mine, the largest copper mine in the world, also rejected an offer for a new collective agreement. This opens the door to the possibility of a strike, and increases concerns about global supplies.

Daniel Haynes, chief commodities strategist at ANZ Bank, said that these developments come at a time when the sector is suffering from a general decline in production, with the difficulty of maintaining aging infrastructure amid complex operating conditions.

In China, weekly data issued on Wednesday showed a decline in copper stocks in warehouses monitored by the Shanghai Futures Exchange to 38,744 tons, the lowest level since January 2024. This reflects the continued scarcity of supply.

The Shanghai Stock Exchange currently remains closed on the occasion of the Chinese National Day, and trading will resume on October 8th.

Despite these supportive factors, supply concerns were unable to limit the pressures on copper this week, with the US dollar rising to its highest levels in 17 months, driven by a broad selling wave in global bond markets as a result of ongoing fears of high inflation and increasing government debt burdens.

The rise of the dollar usually increases the cost of goods denominated in the US currency, including copper, for buyers who hold other currencies, which puts pressure on demand.

Bond market turmoil has also pushed global borrowing costs to their highest levels in decades, which threatens to weaken global economic activity and negatively affects copper, which is known in the markets as “Dr. Copper” due to its use as an indicator of the health of the global economy.

As for the rest of the basic metals on the London Stock Exchange, aluminum fell by 0.18 percent, while zinc rose by 0.15 percent, and lead increased slightly by 0.03 percent. In contrast, nickel fell by 0.19 percent, and tin fell by 0.72 percent.

During Friday's trading, the US dollar is heading towards recording its third consecutive weekly gain, in light of a sharp selling wave in bond markets.

During Friday's trading, the US dollar is heading towards recording a third consecutive weekly gain, in light of a sharp wave of selling in bond markets, driven by inflation fears resulting from high oil prices, in addition to concerns about the public financial conditions in France, which kept the euro near its lowest levels in 17 months.

On Thursday, investors were exposed to a strong selling wave in global bond markets, which pushed the 10-year US Treasury bond yield to 5.344 percent, its highest level since 2002, before investors’ interest in snapping up bonds at low price levels contributed to market stability, according to Reuters.

The 10-year bond yield recorded 5.247 percent in the latest trading on Friday, while the rest of the bond markets also stabilized, with investors awaiting US jobs data that may affect the outlook for monetary policy in the near term, after weak inflation data weakened interest rate hike bets in October.

The euro reached $1.1237, settling near its lowest level since May 2025. On the other hand, the yen rose slightly to 157.84 yen to the dollar, after data showed that annual core inflation in Tokyo accelerated during September to its fastest pace in 10 months.

The dollar index, which measures the performance of the US currency against a basket of six major currencies, rose to 101.93 points, heading for weekly gains of about 1 percent, in the third consecutive weekly rise, a series that has not been recorded since May 2025.

Moh Siong Sim, currency strategist at OCBC Bank in Singapore, said the initial rise in bond yields was a result of rising energy prices, before being overshadowed by financial risk concerns in Europe.

He added that the weak performance of French and Italian government bonds compared to US Treasury bonds and German bonds indicates that investors are moving towards more liquid and safer sovereign debt markets.

He explained that the dollar's strength is more concentrated against European currencies, with the exception of the Swiss franc, which has seen an improvement in its status as a safe haven.

The Swiss franc rose 0.17 percent to 0.8293 francs to the dollar, and reached 0.9333 francs to the euro after rising by more than 1 percent during the previous session.

The strength of the dollar pushed the pound sterling and the Australian dollar to their lowest levels in three months before they partially stabilized, while the New Zealand dollar rose 0.14 percent to $0.5614, after recording its lowest level since November 2025.

Prashant Neoha, chief interest rate strategist at TD Securities, said that the strength of the dollar reflects a move towards safe assets due to developments in Europe, adding that in such circumstances both the dollar index and the yen could rise at the same time.

All eyes are on US jobs data

Investors' eyes are on the US jobs report scheduled to be released later, Friday, amid expectations that the data will show a slowdown in job growth during September, with the unemployment rate likely to stabilize at 4.1 percent for the third month in a row.

The report comes after data showed on Wednesday that consumer prices in the United States rose at a lower-than-expected pace during August, in addition to a downward revision of July numbers. This prompted traders to reduce their bets on the Federal Reserve raising interest rates later in the month.

Two senior Federal Reserve officials also stressed this week the need to obtain more data before making a decision on any new rate hike.

CME's Fed Watch tool shows that traders are currently pricing in a 72 percent probability that the Federal Reserve will keep interest rates unchanged in October, compared to 36 percent a week ago, with their expectations of a rate hike before the end of the year continuing.

Charu Chanana, chief investment strategist at Saxo, said investors are facing a complex mix of persistent inflation, rising government borrowing, and an increased supply of bonds.

She added that the rise in long-term bond yields despite the decline in expectations for an immediate raise by the Federal Reserve indicates that market movements have become more closely linked to the term premium and financial risks, and not just to the Fed’s next decision.

In energy markets, Brent crude futures returned to exceed $100 per barrel, as traders watched the faltering talks between the United States and Iran aimed at ending the seven-month-long war in the Middle East.

Gold prices stabilized during Friday trading, but remained on track to record the second consecutive weekly decline, under pressure from the strength of the US dollar and rising Treasury bond yields, at a time when investors are awaiting the release of US non-farm payrolls data that may provide important indicators regarding the direction of the Federal Reserve’s monetary policy.

Gold in instant transactions recorded $4,184.45 per ounce by 04:19 GMT, settling almost without significant change, while its weekly losses so far amounted to more than 2 percent.

On the other hand, US gold futures rose by 0.3 percent to $4,214.70 per ounce, according to Reuters.

The US dollar is preparing to achieve weekly gains; This increases the cost of metals denominated in the US currency to holders of other currencies. US Treasury bond yields for 10 and 30 years also reached their highest levels since 2002 during Thursday's session.

Kyle Rodda, senior financial markets analyst at Capital.com, said that the markets are closely monitoring US interest rate expectations and geopolitical developments in the Middle East.

He added that the US non-farm payrolls data will be a decisive factor in shaping interest expectations, explaining that if the numbers are stronger than expected, it may enhance the possibilities of raising interest by the Federal Reserve, which may put more pressure on gold prices.

During this week, two Federal Reserve officials stressed the need to wait and collect more economic data before deciding on any additional interest rate hike.

The US jobs report for September is scheduled to be released at 12:30 GMT.

Data released on Wednesday showed that US inflation rose less than expected during August, and it also emerged that price pressures in the previous month were more moderate than initial estimates indicated.

Market pricing currently indicates a probability of only about 28 percent to raise interest during the current month, compared to about 70 percent at the beginning of the month, while expectations are still 82 percent likely to approve a new increase in December.

High interest rates usually negatively affect the attractiveness of gold, given that it is an asset that does not generate returns or interest to its holders.

In terms of geopolitical developments, sources reported that Iran is preparing for a broader and more powerful response if the United States resumes large-scale military attacks, in conjunction with the continuation of diplomatic efforts, which Iranian officials see, in private conversations, as having limited chances of success.

As for other precious metals, spot silver rose by 0.5 percent to $61.18 per ounce, platinum rose by 0.6 percent to $1,734.44, while palladium increased by 0.9 percent to $1,181.93. Despite these daily gains, the three metals are heading to record weekly losses.