Metal stocks brace for further sell-off in copper, volatility in gold, silver

Metal stocks continue to remain in focus on Monday, February 2, as the sector extended losses for the second straight session and continued to lead the broader market sell-off on Sunday.

On the Nifty Metal index

, five stocks had erased close to ₹2 lakh crore in market capitalisation over the past two trading sessions, led by Hindustan Zinc and its parent Vedanta.

Hindustan Copper was as the biggest laggard, plunging 19% on Sunday. The stock witnessed unusually heavy volumes, with around 51.1 million shares changing hands, translating into a traded value of nearly ₹3,018 crore.

Hindustan Zinc slid 13% on Sunday, taking its market capitalisation loss to over ₹60,000 crore across Friday and Sunday.

Vedanta shares dropped 10% on Sunday, with the two-day decline wiping out about ₹54,000 crore in market value after the stock had nearly touched a ₹3 lakh crore valuation last week.

The pressure on metal stocks mirrors continued weakness in global commodity markets. Copper fell further on Monday, adding to the steep correction seen at the end of last week, as traders brace for heightened volatility following a turbulent start to the year.

On the London Metal Exchange, copper declined as much as 3.3% to $12,722 a tonne. The metal had surged to a record above $14,500 last Thursday before tumbling below $13,000 in intraday trade on Friday.

Base and precious metals have been rattled over the past week by intense speculative activity, particularly in China, driven by concerns around the US dollar’s outlook.

Adding to the turmoil, Chinese metals traders have reportedly suffered losses of at least 1 billion yuan, or about $144 million, after a counterparty fled the country leaving trades unsettled. The situation has raised alarms among regulators over hidden financial risks.

The crisis is linked to a trading network run by metals dealer Xu Maohua, known as “The Hat”, with state-backed SDIC Commodities Co. among the prominent entities involved, according to people familiar with the matter.

Xu allegedly owed money for copper and other metal shipments, triggering a chain of unpaid dues and at least one lawsuit seeking over 200 million yuan in damages.

Across commodities, spot silver is now trading flat after plunging as much as 6% in early trade, briefly rebounding before giving up gains. Prices had initially slipped below the $80 an ounce mark from record highs above $120. Gold was trading around 3% lower in early spot market action.

The broader sell-off has been exacerbated by a stronger US dollar, which posted its biggest rally since May after US President Donald Trump named Kevin Warsh as the next Federal Reserve Chair.

The dollar index has climbed back above 97 after sliding to its lowest levels since February 2022 earlier last week.