Copper barely edged higher on the London Metal Exchange Tuesday, after a 2% drop the day before, as a firmer U.S. dollar and the Federal Reserve’s hawkish tone squeezed metal demand. The green‑back pricing of base metals means any dollar rally directly depresses prices, keeping risk‑off sentiment alive. The move also pressured other base metals, extending the broader sell‑off that began earlier in the week.

Analyst Gao Ying of Shuohe Asset Management noted that base‑metal trading now mirrors Fed policy, with speculative long positions scarce. Copper settled at $13,382 per ton in Shanghai by 11:25 a.m., while aluminum recovered 0.1% after a 3.9% plunge to a three‑month trough. Such tight positioning suggests any further Fed tightening could trigger sharper declines, as traders lack protective hedges.

The dollar’s ascent, driven by expectations of higher rates to tame inflation, adds pressure on all commodities priced in U.S. currency. Investors watching the Fed’s next move will likely keep metals on the sidelines, limiting upside for copper and its industrial peers. With inventories stable, the price dip reflects pure macro pressure rather than a supply shock, leaving producers wary of revenue erosion. Thus, any rally will likely be modest until policy signals ease.