Copper, aluminium, zinc hit record-highs as gold and silver's shine fades; what's fuelling the rally?

Copper prices have jumped eight percent this month.

After staging a stunning rally, prices of precious metals gold and silver are experiencing a pullback as demand recedes. However, base metals are extending their strong gains, with a supply crunch, soaring industrial demand, and a weakening dollar fuelling the momentum.

Over the past month, copper and aluminium prices have jumped eight percent each, while zinc has gained nearly five percent. Copper spot prices have hit fresh all-time highs at $11,097 per metric ton on the London Metal Exchange (LME), while aluminium and zinc are trading near record highs in international and domestic markets.

Supply crunch boosts prices

The close of a major copper mine, Freeport-McMoRan based in Indonesia, has driven prices higher. The mine produces roughly three percent of the world’s annual copper. While operations are expected to resume in 2026, full production is only likely 2027 onwards.

Chile’s Codelco has warned that its El Teniente mine will operate below capacity for the next several months, potentially tightening global copper supply. Another mine in Congo has seen disruptions, causing a scarcity.

According to Bhavik Patel, senior commodities analyst at Tradebulls Securities, the red metal is expected to remain in deficit to the tune of 6,00,000 metric tonnes in 2026.

Not just copper, but aluminum production also remains tight due to high energy costs and China's self-imposed 45 million-tonne capacity cap. This tightness is visible in the markets, Aamir Makda, commodity & currency analyst, Choice Broking said.

Patel added that, for aluminium, policy changes like the forthcoming Carbon Border Adjustment Mechanism in Europe are raising cost expectations and creating a rush, before the additional cost burdens are imposed.

Further, the U.S. has reversed its trade agreement with Canada even though most of its aluminum comes from Canada. This push has also driven prices higher, as the metal may see higher tariffs. Zinc is rallying behind inventory decline in LME.

Industrial demand

The demand for the base metals comes amid the surging push for green energy and electric vehicles. There is structural shift in demand for “green metals,” which is leading to strong bullishness in copper and aluminium which are key input resources.

“The growth is powered by the surge in green energy initiatives, global infrastructure projects, and sustained requirements from the EV and solar sectors in China,” said Makda.

Currency boost

The weakening dollar is also posing as a key tailwind for the boost in these commodities’ prices. Most of these metals are traded in the U.S. Dollar on exchanges such as the LME and COMEX. As a result, they have an inverse relationship: foreign buyers pay less of their local currency to buy dollars, and effectively pay a lower price for the metals.

Way forward

Copper prices are expected to hold its gains and move higher amid market tightness, said ICICI Securities. Fresh concerns of supply from Chile would likely to support prices. Further, optimism over the US-China trade deal and lower rates from the US Federal Reserve would also provide support to the base metal.

“Since we have already seen a rally in energy commodities from 2020 to 2022, followed by a tremendous price surge in gold and silver from 2023 to 2025,” said Makda, “It is now time for base metals to grab the spotlight.”