US tariff impact: Copper prices plunge nearly 2%, gold rebounds

New Delhi: Commodity prices witnessed sharp swings last week, with base metal copper dropping nearly 2 per cent while gold gained over 1 per cent after US President Donald Trump imposed a 25 per cent tariff on most Indian goods.

Fresh tariff announcements by Trump fanned fears of a global trade war, leading to a rout in base metals while safe-haven demand lifted precious metal gold last week, analysts said.

They said the unexpected US tariff structure, especially on semi-finished copper goods, sent shockwaves across global commodity markets, with copper prices tumbling sharply and crude oil showing mixed trends amid geopolitical concerns.

Copper crashes as US slaps tariffs on semi-finished imports

Copper was the worst-hit among base metals as the Trump administration imposed a steep 50 per cent tariff on imports of semi-finished copper goods such as wires, tubes and rods. The new duties will come into force from August 7.

However, refined copper, ores, and cathodes were excluded from the levy, creating uncertainty in global supply chains.

On MCX, the August contract of copper fell by Rs 16.35 or 1.82 per cent last week. On July 31, copper prices dropped by Rs 36 or 4 per cent to hit an all-time low of Rs 861.70 per kg. On COMEX, copper prices initially fell nearly 22 per cent from peak levels before rebounding by 1.79 per cent to close at $4.45 per pound. LME Copper futures ended the week up 0.31 per cent at $9,639.60 per tonne.

“President Trump’s tariff announcements have sent shockwaves across global commodity markets, particularly metals. The US imposed a 50 per cent tariff on semi-finished copper products, a 25 per cent levy on Indian imports, and additional trade penalties related to Russian energy transactions,” Riya Singh - Research Analyst, Commodities and Currency, Emkay Global Financial Services, said. “MCX copper prices dropped from Rs 900 to Rs 861 in just three sessions before stabilising. The exclusion of raw forms like cathodes from the tariff list has led to confusion in price discovery,” Singh added.

She noted that traders exited long positions aggressively, leading to the largest weekly outflow in over a year and adding that “India imported over $1.4 billion worth of refined and semi-refined copper in FY24. With the US market restricted, these goods may be diverted to India, risking margin pressure for local fabricators”. According to Heena Naik, Research Analyst - Commodities, Angel One, the US administration initially hinted at wide-ranging copper tariffs, causing a rush of shipments into the US ahead of the August 1 deadline.

“Now, with refined copper excluded from the tariff list, there are concerns of re-exports and a potential oversupply. The sudden narrowing of the tariff scope has disrupted the global copper supply chain,” she said.

Naik also highlighted China’s indirect exposure, being the world’s top producer of copper products, and added that base metals broadly fell over 1.5 per cent last week amid weak demand and tariff headwinds.

Gold and silver trade mixed

On the Multi-Commodity Exchange (MCX), gold futures for October delivery rose Rs 1,292 or 1.3 per cent last week. In global markets, COMEX gold futures surged $51 or 1.52 per cent to settle at $3,413.80 per ounce in New York on Saturday.

Silver, on the other hand, extended losses. MCX silver futures for September delivery plunged Rs 2,829 or 2.5 per cent to end the week lower. COMEX silver futures managed marginal gains of 0.59 per cent to close at $37.08 per ounce. PTI