BofA sees more volatility as tariffs unfold, cuts Copper and Aluminium forecasts

Investing.com -- Bank of America warned of rising volatility across metals markets due to ongoing trade tensions, cutting its 2025 copper and aluminium price forecasts and citing uncertainty around U.S. tariffs and global policy responses.

Volatility reigns as the rules change, BofA strategists wrote in a note. We see more volatility as tariffs and trade policy actions and reactions play out.

The bank lowered its 2025 copper price forecast by 6% to $8,867 per tonne ($4.02/lb) and also downgraded aluminium estimates, citing demand risks from slowing global growth and a potentially stronger U.S. dollar. Coal forecasts were also revised lower, while iron ore was slightly upgraded on improving fundamentals.

Gold, meanwhile, was recently upgraded by BofA, supported by macro uncertainty and investor flight to safety. Uncertainty is bad for global growth (including the U.S.), and likely negative for metal prices, the bank said.

BofA’s outlook comes amid escalating tariff moves by the Trump administration, which have drawn retaliatory threats from China and the European Union. “We think tariffs are bad for consumers and industry,” the bank added. While deregulation and tax cuts may support U.S. growth, BofA said those measures are unlikely to fully offset losses in global demand.

In China, sentiment in equity markets has rebounded, but macro data has remained mixed. BofA’s China economics team held its 2025 GDP growth forecast at 4.5%, but warned of near-term risks tied to the tariff shock. “An alternative scenario would be China demonstrating its economic vitality and countercyclical policy flexibility,” they wrote.

Among large-cap stocks, BofA recommended BHP and Rio Tinto (NYSE:RIO), citing copper growth and a compelling revenue mix including lithium and aluminium.

Longer term, BofA sees structural upside in metals from decarbonization trends and emerging market growth, particularly in India. But it cautioned that short-term drawdowns of 10-20% remain likely along the way.