Copper Outperforms Gold as AI and Defense Demand Builds

Copper has gained nearly 16% in 2026 as artificial intelligence infrastructure, power-grid investment and defense spending increase demand for a metal that governments and industries increasingly view as strategic.

By Carolina Curiel
Published October 21, 2026

SEATTLE (Scrap Monster): Copper is becoming increasingly important to governments, technology companies and industrial users as artificial intelligence, power-grid investment and defense spending increase demand for the industrial metal.

Copper has gained 15.8% since the beginning of 2026 and more than 30% over the past 12 months, according to market data cited by CNBC.

Gold has moved in the opposite direction over the same period. Gold futures were down 4.11% year to date and 4.52% over 12 months, while spot gold was approximately 4% lower for the year at the time of the report.

The divergence reflects a market increasingly focused on copper's role in physical infrastructure, electrification and supply security.

Copper Moves From Critical Metal to Strategic Resource

Ivanhoe Electric CEO Taylor Melvin said governments and industries are increasingly focused on securing reliable supplies of metals needed for national security, economic growth and technology infrastructure.

Speaking during LME Week in London, Melvin argued that metals traditionally described as critical are increasingly being treated as strategic assets.

That change is particularly significant for copper because the metal is difficult to substitute across many electrical, industrial and defense applications.

LME Week, which began October 19, brings together producers, consumers, traders and investors to discuss trends affecting global metals markets.

AI Creates a New Source of Copper Demand

Artificial intelligence infrastructure is emerging as another important source of copper consumption.

Hyperscale data centres require large amounts of electrical equipment, cabling, transformers, substations and grid infrastructure, all of which contain significant quantities of copper.

Melvin described this technology-related demand as relatively insensitive to movements in copper prices.

For a large technology company committing billions of dollars to a data-centre development, the cost of copper is unlikely to determine whether the overall project proceeds.

That means concerns about valuations in technology equities do not necessarily translate directly into weaker physical demand for copper.

Power Grids Add Another Structural Demand Driver

The AI build-out is occurring alongside a much larger global requirement to expand and modernize electrical grids.

Transmission lines, transformers, substations, renewable-energy connections and conventional power infrastructure all require copper.

As electricity consumption rises from data centres, electric transportation and industrial electrification, grid investment can create copper demand independently of conditions in individual technology stocks.

This gives copper exposure to several long-term infrastructure themes rather than relying on a single source of growth.

Defense Spending Strengthens Copper's Strategic Role

Defense and national-security spending represent another source of demand.

Copper is used throughout military communications, vehicles, electronics, power systems and other equipment.

Melvin said defense demand shares some of the same price-insensitive characteristics as technology infrastructure because national-security procurement decisions are not typically determined by relatively small movements in the copper price.

The growing emphasis on secure domestic and allied supply chains is also changing how governments evaluate access to the metal.

Copper Has Outperformed Gold in 2026

The shift has been visible in market performance.

The comparison does not mean copper and gold serve the same role in portfolios. Gold is primarily viewed as a monetary and safe-haven asset, while copper is closely tied to industrial activity and infrastructure investment.

It does, however, illustrate how strongly the market has responded to copper's tightening strategic importance during 2026.

U.S. Refined Copper Tariff Remains Uncertain

Trade policy is adding another layer of uncertainty to the market.

In 2025, the U.S. Commerce Department recommended a phased tariff on refined copper of 15% beginning January 1, 2027 and 30% beginning in 2028.

The White House did not automatically impose those refined-copper tariffs. Instead, the July 2025 proclamation directed the Commerce Department to review U.S. copper-market conditions before the President determined whether the proposed duties were warranted.

Current Section 232 measures already apply to a range of semi-finished copper products and copper-intensive derivatives.

As of October 21, 2026, no subsequent White House proclamation located in the public record confirms that the proposed 15% tariff on refined copper will take effect on January 1.

That uncertainty remains relevant because expectations around U.S. tariffs have already influenced global copper flows and contributed to unusually large inventories in American warehouses.

Supply Remains the Other Side of the Story

Strong demand is only part of copper's current market narrative.

Mine development timelines remain long, ore grades are declining at many mature operations, and major new projects require substantial capital and permitting.

That creates a potential mismatch between the speed at which new electricity-intensive industries can expand and the time required to bring additional copper supply online.

The combination of new demand sources and constrained supply growth is one reason copper has attracted increasing attention during LME Week.

Courtesy: CNBC