Copper and gold prices faced sharp headwinds following the debut of Kevin Warsh as US Federal Reserve Chair, as his resolutely hawkish tone on inflation rattled commodities markets. Copper slid on the London Metal Exchange, while gold struggled to break above the key $4,300 level, reflecting a rapid repricing of interest rate expectations.
Warsh’s hawkish tone triggers metals selloff
In his first press conference, Warsh stressed that inflation risks remain elevated and that the Fed must be prepared to act decisively. His remarks were widely interpreted as a signal that interest rates could rise sooner than previously anticipated. Traders quickly shifted bets, with the probability of a 25-basis-point rate hike as early as July climbing above 60% according to the CME FedWatch Tool. The more hawkish outlook drove a selloff in growth-sensitive commodities: copper for three-month delivery on the London Metal Exchange fell 0.9% to $13,703.25 per ton, while spot gold oscillated in a tight range around $4,295–$4,310, unable to sustain a breakout.
Dollar strength and yield repricing amplify pressure
The prospect of tighter monetary policy lifted US Treasury yields—particularly the policy-sensitive 2-year note—and pushed the US dollar index higher. A stronger greenback made dollar-denominated metals more expensive for overseas buyers, intensifying the decline in copper and capping gold’s safe-haven appeal. Gold’s traditional inverse correlation with the dollar was evident, with the $4,300 level acting as a pivot; a failure to break higher risks a slide toward $4,260 or lower.
Broader implications for industrial and precious metals
Copper, often viewed as an economic barometer, fell more than 1% intraday amid concerns that higher borrowing costs could dampen construction, manufacturing, and infrastructure investment—sectors vital to copper demand. The decline also cast a shadow over the metal’s role in the energy transition, though structural supply constraints may offer medium-term support. Gold found a floor from central bank buying and geopolitical uncertainty, yet the hawkish repricing capped gains, leaving traders in wait-and-see mode.
Market participants are now bracing for further volatility as they assess how Warsh’s leadership will shape Fed policy. His criticism of the central bank’s traditional “dot plot” forecasts has added a layer of uncertainty, likely keeping pressure on growth-sensitive commodities until clearer guidance emerges.
