Federal Reserve

Imagine this: you have just taken office as the head of the world’s most powerful central bank. You step up to your first press conference, deliver a few remarks about your commitment to fighting inflation—and within hours, global copper prices fall by 1%, wiping out all the optimism that had fueled markets at the start of the week.

Welcome to the reality facing Kevin Warsh, the new Chair of the Federal Reserve.

The irony is that just one day earlier, metal markets were celebrating. A peace agreement between the United States and Iran promised lower geopolitical risks and greater stability in energy markets. Industrial metals—including copper, aluminum, and zinc—were rising, and investors were already positioning for a continued rally.

Then one press conference in Washington changed everything.

Copper on the London Metal Exchange fell to $13,694.50 per metric ton. Aluminum lost 0.5%, while zinc dropped 0.4%. Iron ore futures in Singapore touched their lowest level since March at $98.80 per ton before recovering slightly to $99.15.

All because of the words Warsh spoke on his very first day in office.

What exactly did the new Fed Chair say that prompted metal markets to react faster than policymakers could blink? And why did copper—often called the “doctor of the economy” because of its sensitivity to economic cycles—find itself at the center of the storm?

Let’s take a closer look.

Kevin Warsh did not arrive at the Fed as a newcomer. He previously served at the Federal Reserve during the 2008 financial crisis as a member of the Board of Governors before moving into the private sector.

Many viewed his appointment as the return of a veteran—someone who had...