KEY POINTS
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Goldman Sachs sees downside risks to its 2027 copper price forecast of $15,400 a tonne.
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The bank says AI-related investor positioning and lower US tariff expectations could put pressure on prices.
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Copper traded at $13,612 a tonne on the London Metal Exchange but was heading for a weekly loss.
Goldman Sachs has warned that copper prices could fall below its 2027 forecast of $15,400 a tonne, citing changing investor sentiment towards artificial intelligence (AI) investments and expectations of lower US tariffs.
The investment bank said on Thursday that the biggest threat to its forecast was not a decline in physical copper demand but changes in how investors were positioning themselves in the market.
The warning comes as concerns about the sustainability of the AI investment boom weigh on financial markets, with investors becoming more cautious about companies and industries exposed to the technology sector.
AI Investment Concerns Put Copper Prices Under Pressure
Goldman Sachs said uncertainty surrounding the future of AI investment could affect copper market sentiment, particularly if expectations of slower spending on data centres and related infrastructure lead investors to reduce their exposure.
The concerns are partly linked to the possibility of Democrats gaining control of Congress following the US midterm elections.
Investors fear that a Democrat-controlled Congress could slow investment in artificial intelligence and the expansion of data centres, potentially affecting expectations for future copper demand.
Copper is widely used in electrical infrastructure, power networks and data centres, making it an important industrial metal for the expansion of digital and energy infrastructure.
However, Goldman Sachs stressed that the immediate risk to its price outlook was largely driven by financial market positioning rather than changes in actual physical consumption.
Bank Revises Expectations Under Different Market Scenarios
The bank maintained its 2027 copper price forecast at $15,400 per tonne but outlined scenarios that could result in lower average prices.
Goldman Sachs said copper could average approximately $14,600 a tonne in 2027 if investor positioning remained at current levels.
It also estimated that prices could average around $14,500 a tonne if lower US tariff expectations affected market conditions.
The bank warned of further downside if a large proportion of the copper inventories accumulated in the United States during the current year were released back into the global market.
Such a development could increase copper availability elsewhere and place additional pressure on international prices.
US Tariff Expectations Add to Market Uncertainty
Goldman Sachs also identified changing expectations around US tariffs as another risk to its forecast.
The bank said expectations of lower tariffs could undermine its assumption that the United States would continue building up copper inventories.
However, it cautioned that a Democratic victory in the midterm elections would not necessarily eliminate the possibility of tariffs.
The uncertainty surrounding US trade policy, combined with investor concerns about AI-related investments, has added pressure to the copper market.
On the London Metal Exchange, benchmark three-month copper rose 0.2 per cent to $13,612 a tonne.
Despite the daily increase, the metal was heading towards a weekly loss amid a broader sell-off in AI-related investments.
The latest market movement illustrates the influence of investor sentiment and expectations about future industrial demand on copper prices, even as the metal remains important to the expansion of electricity infrastructure, renewable energy and data centres.
