Copper futures settled at $6.71 per pound on Comex on Tuesday, marking the highest closing price in the metal’s history. The record move is part of a broader trend known as the debasement trade, which involves investors rotating into scarce assets amid concerns that US debt management will erode the value of the dollar.
September copper futures gained roughly 1.6% to reach the milestone. While supply strains initially contributed to the metal's strength—including a 14% drop in London Metal Exchange stockpiles since late July, reduced output forecasts in Chile, and a smelter outage in Indonesia—monetary factors have increasingly driven the market.
Market participants point to the US Treasury's decision to double its maximum bond buyback size to at least $4 billion as a key catalyst. Critics view the expanded program as a form of easing that places downward pressure on the currency. Following the announcement, the dollar index hovered near three-month lows.
Precious metals have climbed alongside industrial metals. Gold traded around $4,666 an ounce, tracking its best month since 1999 and rising for five consecutive weeks. Silver held near $69 an ounce. Deutsche Bank analyst Michael Hsueh noted potential for gold to reach $4,800, while Bridgewater Associates founder Ray Dalio stated that the government's financial condition is at an inflection point.
Bitcoin has moved in tandem with the metals, trading near $78,900 after briefly topping $81,000 on Tuesday for its strongest level since May. The cryptocurrency's recent 22% jump marked its sharpest three-day rally in years, catching bearish traders off guard and triggering more than $4 billion in short liquidations according to CoinGlass data.
Stephen Coltman, head of macro at 21Shares, noted that the Treasury buyback announcement carried a powerful signaling effect. Moving forward, market participants are expected to monitor upcoming Treasury buyback operations to gauge the ongoing direction of currency and asset pressures.
