Dollar Pauses as Commodities Rally Emerges 

The price of copper soared beyond $4.6 per pound, nearing the peak of $4.7 set two years ago, amid a weakening dollar and rising concerns over supply. The combination of investors anticipating interest rate reductions and a disappointing U.S. jobs report exerted downward pressure on the U.S. dollar. 

This, in turn, enhanced the buying capacity of major overseas buyers and elevated the prices of essential metals. The mounting worries over supply sparked a substantial surge in copper’s value during the second quarter. Operations at Cobre Panama, the globe’s most extensive open-pit copper excavation site, came to a halt, and significant mines in Zambia were impacted by electricity shortages. Challenges in securing raw materials and reduced profit margins for smelters in China have led to predictions of a 10% reduction in production for the current year.  

Furthermore, the steep expenses associated with establishing new mining operations prompted companies to seek mergers and acquisitions with competitors rather than starting fresh ventures. A recent case in point includes BHP’s endeavor to acquire Anglo American. Regarding demand, the high need for copper, owing to its critical function in electrical infrastructure, supports a bullish market trend for the foreseeable future. 

(Copper Price Yearly Chart) 

On Monday, Brent crude oil futures climbed, reaching over $83.5 a barrel after recovering from the nearly two-month trough of $83 seen in the previous session, spurred by recent indications of tightening supply.  

Saudi Aramco raised the official selling price for its Arab Light crude by 90 cents per barrel for June deliveries, exceeding the anticipated increase of 60 cents, reflecting a belief in OPEC+ members’ commitment to reducing output as indicated earlier. The action aligns with the consortium’s recent declaration that they might prolong the self-imposed reduction in production, which stands at 2.2 million barrels daily, past June if the demand doesn’t pick up, though official talks have yet to commence.  

Moreover, Israel shut down the Kerem Shalom humanitarian access into Gaza and advised citizens to vacate Rafah after a barrage of rockets launched by Hamas during the weekend, threatening the tentative strides towards a truce and the previously waning worries of an escalation in conflict that had previously led to a slump in oil prices. 

(Brent Crude Six-month Chart) 

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