Heated US inflation readings deepen downward pressure on copper, though local supply shortages ease the blow

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Copper pressured by US inflation, dollar strength and tight Chinese supply

Highlights

Stronger than expected US inflation in early November 2026 increased dollar strength and raised expectations for further Federal Reserve interest rate hikes.
Copper inventories at the Shanghai Futures Exchange fell over 24% in one week, reaching a three-year low in November 2026.
Copper trades below key moving averages with negative MACD signals, facing resistance near $6.31 and persistent downside risks unless this level is broken.

US inflation and dollar strength weigh on copper as supply shrinks

According to Uzdaily, early November 2026 saw US inflation readings come in higher than expected, which strengthened the dollar and led to expectations of another Federal Reserve interest rate increase. This policy backdrop put pressure on industrial metals markets. Price action has remained under broader selling pressure.

Ongoing dollar strength and the outlook for higher US interest rates typically reduce foreign demand for commodities such as copper, as dollar-denominated metals become less affordable to global buyers. For copper, these developments raise the risk of weaker demand, especially outside China, and contribute to downward trend pressures on the metal.

However, Uzdaily also reported that copper inventories at the Shanghai Futures Exchange in November 2026 dropped by over 24% in just one week, reaching their lowest in nearly three years. This sharp local supply contraction in China has partially offset the global macro headwinds by supporting physical copper prices within the region.

4H chart under pressure; short-term momentum lacking

On the 4H chart, the current price sits below the 20-period and 50-period SMA, reflecting lack of strong short-term momentum. The price also remains below the 200-period SMA on the daily timeframe, aligning with a cautious technical backdrop.

MACD is in negative territory with a strong sell signal, while ADX points to a selling trend but not at a high conviction level. The Kijun level near $6.32 is acting as resistance in the near term.

Macro tightening and Chinese supply drive next breakout

Copper faces continued macro risk from US inflation surprises and monetary tightening, with the $6.31 area serving as the next key resistance if a rebound materializes. Sustained low Chinese inventories or new Fed indications may trigger fresh volatility. Without a break above this level, downside risks will remain dominant.

Anton Kharitonov, Traders Union expert, sees copper under pressure as US inflation and a stronger dollar shift sentiment against metals. Macro risks from tightening Federal Reserve policy directly reduce foreign demand and weigh on price momentum. Technically, the market remains weak with no clear recovery signal while strong resistance sits at $6.31. "Until copper can reclaim the $6.31 level, any rebound will face strong headwinds from both fundamentals and technicals."

Previously it was reported that MMG was adjusting its bid for Anglo American's Brazilian nickel business to address European Commission concerns over critical mineral supply chains. The current outlook for copper similarly highlights the importance of macroeconomic forces, with traders closely monitoring US monetary policy and Chinese inventory trends for the next decisive move.

Source of Data: HG Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

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