Copper futures hit a 6% lower circuit during the special trading session on Sunday, February 1, extending the sharp reversal seen across global metal markets after prices touched record highs earlier in the week. On the Multi Commodity Exchange, copper futures dropped to around Rs 1,215.60 per kg, locking at the lower circuit shortly after the opening.
The sharp fall follows a broad-based selloff in metals on Friday, when gold, silver and copper all retreated sharply as investors rushed to lock in profits amid fading expectations of aggressive U.S. interest rate cuts and a steadier dollar.
Dollar strength and Fed leadership change weigh on metals
Market sentiment turned cautious after Donald Trump announced that former Federal Reserve Governor Kevin Warsh would be nominated to head the U.S. Federal Reserve. The announcement pushed the U.S. dollar index higher, pressuring dollar-denominated commodities.
Analysts noted that markets view Warsh as a relatively policy-conservative choice, reducing expectations of aggressive rate cuts. A firmer dollar makes metals more expensive for non-U.S. buyers and often triggers model-driven selling by funds.
Profit booking after record rally
Copper had surged to an all-time high of $14,527.50 per metric ton on Thursday before reversing sharply. Despite Friday’s fall of over 1% globally, copper is still up about 6% in January, following an 11% rise in December. The rapid rally, however, left the market vulnerable to profit-taking in thin liquidity conditions.
Analysts said the metal market had become increasingly crowded, with speculative flows amplifying price swings during both the rally and the correction.
Volatility expected ahead of China holiday
Traders are bracing for continued volatility in copper and other industrial metals such as aluminium ahead of the Lunar New Year holiday on February 16, when China — the world’s largest metals consumer — shuts markets for a week. Market participants expect further position unwinding as traders reduce exposure during the holiday period.
The takeaway
Copper’s 6% lower circuit mirrors the sharp reversal seen in gold and silver and underscores how quickly sentiment can shift after record rallies. With profit booking, dollar strength, and crowded positioning colliding, industrial metals remain vulnerable to sharp and sudden moves in the near term.
