Copper prices surged at their fastest pace in more than a month, moving close to record highs as markets largely ignored the deadlock between the United States and Iran over ending the war and reopening the Strait of Hormuz.

All major metals contracts on the London Metal Exchange rose, after the exchange’s composite metals index closed Friday trading at a new record high. Base metals, from copper to zinc, continue to show notable strength amid signs that demand is outpacing supply.

Copper climbed 2.7% to settle at $13,943 per ton, marking the highest close in its history and surpassing the previous peak of $13,618 recorded on January 29.

Jia Zheng, trading director at China’s Harmony-Win Capital Management, said “the market has moved beyond the impact of the US-Iran war, and copper now has its own independent price trend,” pointing to tight supply conditions and declining inventories in China as the main supportive factors.

Industrial metals also received additional support from strong Chinese exports, with April exports rising 14% year-on-year, particularly clean technology exports that rely heavily on copper.

Citi analysts believe demand linked to the energy transition and defense industries, alongside supply constraints, will support copper prices even if the Strait of Hormuz remains closed for an extended period.

In other metals markets, aluminum rose more than 2%, while nickel gained 1.9%. The closure of Hormuz is affecting Gulf aluminum smelters and nickel producers that rely on sulfur supplies coming from the region.

Morgan Stanley analysts noted that aluminum could continue receiving support if the closure of the strait drags on, especially since restarting smelters requires long periods of time, potentially creating new buying opportunities in the market.

The US dollar extended its gains for a second consecutive session on Tuesday, supported by ongoing uncertainty surrounding the Middle East conflict, which pushed investors toward the dollar as a traditional safe-haven asset.

The dollar had surged sharply in March amid heavy selling of oil-dependent currencies such as the Japanese yen and the euro after oil prices jumped following Iran’s effective closure of the Strait of Hormuz.

However, the dollar retreated again after April 7, the date the ceasefire began, which Donald Trump threatened to end on Monday, describing the Iranian proposal as “nonsense.” The US currency is now approaching its pre-war levels.

Mohit Kumar, economist at Jefferies, said: “A breakthrough before the Trump-Xi summit later this week appears unlikely.”

Trump is expected to arrive in Beijing on Wednesday, where Iran is scheduled to be among the key topics discussed with Chinese President Xi Jinping.

Crude Oil Prices Support the Dollar

Thierry Wizman, global FX and rates strategist at Macquarie Group, said: “As long as crude oil prices remain elevated due to the US blockade on Iranian ports and Iran’s threats against tanker traffic in the Gulf, the dollar will remain strong.”

He added: “The economic damage suffered by the rest of the world from higher oil prices will be far greater than the damage faced by the United States.”

Oil prices rose 2% on Tuesday as hopes for a deal to end the war with Iran continued to fade.

Wizman also noted that the US administration may have concluded that its economic blockade on Iran — or what is being described as “economic warfare” — could prove more effective than resuming airstrikes.

The US Dollar Index, which measures the currency against a basket of major foreign currencies, rose 0.35% to 98.30. The index stood at 97.85 on February 27 before climbing to 100.64 in late March, before falling below pre-war levels again late last week.

Investors are also focused on monetary policy expectations, with the Federal Reserve expected to keep interest rates elevated for longer to combat inflationary pressures, while traders expect the European Central Bank to raise its deposit rate to around 2.75% by year-end from the current 2%.

The euro fell 0.33% to $1.1744.

Attention is now turning toward the US inflation report due later in the session, which is expected to show consumer prices rising 0.6% last month after a 0.9% jump in March, according to a Reuters poll of economists. Forecasts ranged between a 0.4% and 0.9% increase.

The data could strengthen expectations that the Federal Reserve will keep interest rates unchanged in the near term. Traders have now fully priced out rate cuts for this year, compared with expectations for two cuts before the outbreak of the Iran war.

Yen Remains Under Watch

The Japanese yen suddenly jumped late in Tuesday’s Asian session, sparking speculation about a possible “rate check,” which often precedes intervention in the currency market.

The dollar traded at 157.57 yen, up 0.25% on the day, after US Treasury Secretary Scott Bessent expressed strong confidence that Bank of Japan Governor Kazuo Ueda would guide the central bank toward a “very successful” monetary policy.

Japanese authorities are believed to have spent nearly $63.7 billion during the current round of interventions.

Gold prices declined in the European market on Tuesday, pulling back from the three-week high recorded earlier during Asian trading, and heading toward their first loss in the past three sessions, pressured by correction and profit-taking activity alongside a stronger US dollar and rising global oil prices.

Higher fuel prices are renewing inflationary pressures on Federal Reserve policymakers, reducing the likelihood of near-term US interest rate cuts. Investors are also awaiting the release of key US inflation data for April later today to reassess those expectations.

Price Overview

• Gold prices today: Gold prices fell by more than 1.0% to ($4,687.35) from the session opening level at ($4,735.87), after hitting an intraday high of ($4,773.58), the highest level since April 21.

• At Monday’s settlement, gold prices gained 0.45%, marking a second consecutive daily advance.

US Dollar

The US Dollar Index rose by 0.45% on Tuesday, extending gains for a second straight session and reflecting continued strength in the US currency against a basket of major and minor currencies.

The rise comes amid increased safe-haven demand for the US dollar due to fears of renewed military confrontations between the United States and Iran, especially after Tehran rejected the US peace proposal.

Global Oil Prices

Oil prices in global markets climbed nearly 3% on Tuesday, extending broad gains for a second consecutive day amid fears that the Strait of Hormuz could remain closed, disrupting oil supplies.

Rising oil prices are undoubtedly reviving concerns over accelerating inflation, which could push major central banks toward raising interest rates in the near term, marking a sharp reversal from pre-war expectations of rate cuts or prolonged policy stability.

US-Iran Negotiations

US President Donald Trump said on Monday that the ceasefire with Iran was “close to collapse,” after Tehran’s response to a US proposal aimed at ending the war showed that both sides remain far apart on several key issues.

Trump also confirmed that he is seriously considering relaunching “Project Freedom,” while announcing plans for a major meeting with senior generals and military commanders to discuss available options and strategies regarding the Iranian file.

Meanwhile, Iranian Parliament Speaker Mohammad Bagher Ghalibaf stated that there is no alternative to accepting Iran’s proposal, stressing that Tehran is prepared to respond immediately to any military action.

US Interest Rates

• According to the Federal Reserve’s semiannual report released on Friday, the ongoing war with Iran and its impact on oil prices and supplies topped the list of financial stability concerns.

• Amid rising oil prices, and according to the CME FedWatch Tool, markets increased pricing for the probability of keeping US interest rates unchanged at the June meeting from 95% to 98%, while the probability of a 25-basis-point rate cut fell from 5% to 2%.

• To further reassess those expectations, investors are awaiting the release of key US inflation data for April later today.

• The US Senate is also set to vote today on whether to approve or reject Kevin Warsh’s nomination as Federal Reserve Chair for the term extending from May 2026 to May 2030.

Gold Outlook

Daniel Pavilonis, Senior Market Strategist at RJO Futures, said markets remain heavily focused on expectations surrounding the Strait of Hormuz, particularly the possibility of reopening it, while also increasingly pricing in the broader scenario of rising energy costs.

SPDR Gold Trust

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, increased by 2.29 metric tons on Monday for a third consecutive daily gain, bringing total holdings to 1,036.28 metric tons, the highest level since April 30.

The euro declined in European trading on Tuesday against a basket of global currencies, extending its negative movement for a second consecutive session against the US dollar, as investors continued favoring the US currency as the top safe-haven asset amid fading hopes for a US-Iran agreement that could end military tensions in the Middle East.

With global oil prices continuing to rise, markets are increasingly pricing in the possibility of a European interest rate hike in June. Investors are now awaiting additional economic data from the eurozone to reassess those expectations.

Price Overview

• EUR/USD today: The euro fell more than 0.2% against the US dollar to $1.1757, from today’s opening level at $1.1783, while the session high was recorded at $1.1788.

• The euro ended Monday down less than 0.1% against the dollar, due to renewed corrective selling and profit-taking after reaching a three-week high at $1.1797.

• Beyond profit-taking activity, the euro weakened due to fears of renewed war between the United States and Iran.

US Dollar

The US Dollar Index rose 0.25% on Tuesday, extending gains for a second straight session, reflecting continued strength in the US currency against a basket of global currencies.

The rise comes as investors continue buying the US dollar as a safe haven amid growing concerns over renewed military confrontation between the United States and Iran, especially after Tehran rejected the American peace proposal.

US-Iran Negotiations

US President Donald Trump said on Monday that the ceasefire with Iran was “close to collapse,” after Tehran’s response to a US proposal to end the war showed that both sides remain far apart on several key issues.

Trump also confirmed that he is seriously considering relaunching “Project Freedom,” while announcing plans for an upcoming meeting with a large group of generals and military commanders to discuss available options and strategies regarding the Iranian file.

Meanwhile, Iranian Parliament Speaker Mohammad Bagher Ghalibaf said there is no alternative to accepting Iran’s proposal, stressing that Tehran is prepared to respond immediately to any military action.

Global Oil Prices

Oil prices rose nearly 1% on Tuesday, maintaining gains for a second consecutive day amid fears that the Strait of Hormuz could remain closed and continue disrupting global oil supplies.

Higher global oil prices are undoubtedly reviving fears of accelerating inflation, which could push central banks worldwide toward raising interest rates in the near term, marking a sharp shift from pre-war expectations of prolonged rate cuts or policy stability.

European Interest Rates

• As global oil prices continue rising, money markets raised pricing for a 25-basis-point European Central Bank rate hike in June from 45% to 50%.

• Investors are now awaiting more eurozone data on inflation, unemployment, and wages in order to reassess those expectations.