Copper futures dropped below $6.2 per pound on Thursday, touching their lowest levels in three weeks as heightened uncertainty in the Middle East and growing expectations of central bank interest rate hikes weighed on the outlook for industrial metals. The US and Iran exchanged attacks this week in a major violation of their ceasefire, although the US military later said it had completed its latest strikes on Iran, raising hopes that tensions may ease. Meanwhile, US consumer inflation accelerated in May to its fastest pace in more than three years due to soaring energy costs, though the reading matched market expectations. Traders modestly pared expectations for Federal Reserve rate hikes this year, although a quarter-point increase in December remains fully priced. The prospect of higher borrowing costs continued to cloud the demand outlook for metals, as tighter monetary policy is expected to eventually slow economic activity and industrial consumption.

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