Copper's Record Rally Stalls: Analysts Warn of Impending Correction Amid Speculative Frenzy
Copper's blistering rally, which propelled the industrial metal to a historic peak above $14,000 per ton this week, has abruptly lost momentum. The sharp Friday sell-off, mirroring declines in gold and silver, has market watchers questioning the sustainability of the surge and bracing for a potential downturn.
The reversal highlights the complex forces driving the metals market. While copper is essential for electrification and AI infrastructure, fueling long-term bullish narratives, its recent trajectory has increasingly mirrored the speculative fervor seen in precious metals. Analysts at Goldman Sachs, who recently revised their price targets upward, now warn of a looming correction in the second quarter of 2026.
A key catalyst, according to a Goldman research note, could be a U.S. policy decision on refined copper tariffs. The Biden administration is expected to conclude a review of the tariff structure on the metal by mid-2026. This follows the Trump administration's 2025 imposition of a 50% levy on imports of semi-finished copper products, which triggered aggressive stockpiling by U.S. buyers. Goldman analysts suggest that a new tariff ruling "would likely signal the end of the stockpiling phase and refocus the market on a growing global surplus."
Beyond geopolitics and trade policy, the rally faces scrutiny over its fundamental drivers. "The price action is showing clear signs of detachment from on-the-ground demand, particularly in China," said Kieran Tompkins, Senior Commodities Economist at Capital Economics. "Physical consumption indicators remain soft, suggesting this rally is being sustained more by financial flows than industrial need."
This sentiment is echoed by José Torres of Interactive Brokers, who points to "nationalistic investment strategies" as a partial driver, with some investors backing commodities perceived as critical in the U.S.-China tech race. Goldman's Eoin Dinsmore concluded that copper has "overshot its fair fundamental value," setting the stage for a correction once the speculative heat cools.
Market Voices: A Split on Sustainability
Michael Chen, Portfolio Manager at Hartford Funds: "This is a classic case of narrative overtaking reality. The long-term demand story for copper in energy transition is undeniable, but the market has priced in a decade of growth in just a few months. A healthy pullback is necessary and inevitable."
Sarah Jennings, Chief Strategist at ClearView Analytics: "The volatility underscores the market's hypersensitivity to policy whispers. The 2026 tariff decision isn't just a trade issue; it's a bellwether for how Western economies will secure strategic resources. The correction, when it comes, will be a buying opportunity for patient investors aligned with the green energy shift."
David Park, Independent Commodities Trader: "It's pure madness. We're seeing the same FOMO-driven speculation that blew up in meme stocks. These prices aren't supported by warehouse data or factory orders. When the music stops, and it will, the retail investors piling in now will be left holding the bag. The regulators should be looking at this."
Dr. Aris Thorne, Economic Historian at Carnegie Institute: "History is repeating itself. The confluence of geopolitical tension, easy monetary policy, and a compelling 'story' for a commodity always breeds a bubble. Copper is the latest chapter. The fundamental shift in demand is real, but the current price is a monument to speculation."