Copper Prices Plummet After Record Highs: Future Gold or Volatile Asset?

• Copper prices, after reaching record highs last week, experienced a sudden drop of up to 4.2% on the London Metal Exchange (LME) to $12,600 per tonne.
• The sell-off was triggered by a re-evaluation of risks by traders and concerns over potential interest rate hikes after Kevin Warsh's appointment to the Federal Reserve.
• Despite the recent decline, copper has delivered strong returns over the past year, with 2025 futures still up over 40% due to supply issues and clean energy demand.
• Chinese investors remain bullish on copper for the medium to long term, with record trading volumes on the Shanghai Futures Exchange, despite some short-term risk reduction.
• Industrial demand remains weak, with manufacturers reducing purchases and an unexpected slowdown in China's manufacturing activity, creating a gap between investor trading and real consumption.

Why It Matters: Copper prices saw a sharp correction after record highs, driven by market volatility and interest rate concerns.