Copper could be under further pressure as Iran war threatens global economy, says Goldman Sachs

As metals markets prepare for Trump's deadline for Iran to reach an agreement or risk widespread attacks on civilian infrastructure, Goldman Sachs cautioned that copper is susceptible to further losses if the Strait of Hormuz stays blocked.

As rising oil and gas costs threaten to impede economic growth and reduce demand for industrial commodities, pressure on the majority of base metals has increased over the past month. As investors consider Trump's growing threats against Tehran, there is a great deal of anxiety in the markets on Tuesday.

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A Bloomberg report, quoting an analyst, stated that copper was already trading significantly above its estimated fair value of roughly $11,100 per tonne, even though Goldman's base case is for the strait to start reopening in mid-April. Since the strikes on Iran, prices have already decreased by almost 7%.

According to the analysts, a tight market outside of the US and the possibility of broad strategic hoarding continue to strengthen copper. However, they cautioned that in the event of the bank's "severely adverse" scenario for the global economy, such characteristics might become less important.

They stated that if the economic outlook worsens and investors reduce their risk, the copper price is susceptible to another decline because fundamentals are not supporting it at the current level. The bank reduced its base-case estimate for copper prices this year from $12,850 to an average of $12,650 a tonne.