Copper is emerging as the standout performer in the commodities market for 2026, evolving from a mere industrial component into a strategic asset. The rapid expansion of Artificial Intelligence, significant investments in electrical grids, and surging defense spending have propelled copper prices to outperform gold, the traditional safe-haven asset.
Surpassing Gold's Performance
Data indicates that copper prices have climbed 15.8% since the beginning of 2026, with a year-over-year increase exceeding 30%. In contrast, gold has faced a downturn, with futures dropping 4.11% year-to-date and spot prices showing similar declines.
Taylor Melvin, CEO of Ivanhoe Electric, notes that this shift stems from a growing focus by nations and industries on securing access to metals vital for national security and technological infrastructure. Speaking at LME Week in London, Melvin stated that metals previously labeled as "critical" are now effectively "strategic metals" in every sense.
Inelastic Demand from Tech and Defense
Despite recent fluctuations in technology stocks, the demand for copper appears largely "inelastic." Large-scale data center investments by major tech firms are unlikely to be deterred by the rising cost of copper, as the metal remains an essential component of their infrastructure.
A similar trend is observed in national security and defense budgets. These emerging sources of demand are less sensitive to price changes, providing a robust foundation for the ongoing copper rally even during periods of market volatility.
Supply Constraints and the Impact of Tariffs
The rally is further supported by supply-side uncertainties. A proposed 15% US tariff on refined copper, recommended to take effect in 2027, has led to significant stockpiling within the United States. This move potentially restricts the availability of these stocks for the rest of the global market.
Concurrently, Iain Pyle, senior investment director at Aberdeen Investments, highlighted that inventories in China have hit extremely low levels. According to Pyle, copper is the clearest example of a market where supply is failing to keep pace with demand, suggesting that sustained higher prices may be necessary to incentivize increased production.
