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Mounting inflation fears spilt over into the industrial metals sector on Tuesday, dragging down the share prices of mining heavyweights Anglo American, Glencore and BHP as investors braced for interest rate hikes.While inflation concerns have weighed on precious metal producers since the start of the Iran war, their effect on base metal miners has so far been measured. However, with prices now expected to stay high for longer, markets are increasingly anxious of cooling demand for industrial commodities.Copper prices, which were trading around record highs as recently as early June, have taken a steep tumble over the past week due to subdued Chinese demand, according to Trading Economics data.The anxiety about prices saw shares in Anglo American and BHP, both of whom have centred most of their growth strategies around their South American copper mines, lose 4.87% and 3.6%, respectively, on Tuesday, each closing at their lowest levels in six weeks. (Dorothy Kgosi) Glencore, another copper giant, fell 4.58% to its own three-month low. As a result, the industrial metals & mining index was down 4.26%, its worst day in more than a month, closing at levels not seen since April.All of this comes just days after American and Iranian officials concluded what appeared to have been a positive round of talks in Switzerland, suggesting that inflation and interest rate fears extend beyond the Strait of Hormuz.Consulting firm Kearney has warned that due to the pressure of Middle East tension on fuel prices and supply chains inflation is unlikely to peak soon. SA Reserve Bank governor Lesetja Kganyago expects inflation to peak only in the first quarter of next year.That probably means central banks everywhere will be forced to raise their borrowing rates, discouraging investment in new mining projects and squeezing base metal prices.In recent months, inflation has continued to hover above the US central bank’s 2% target. The hawkish tone from Federal Reserve chair Kevin Warsh at his first federal open market committee meeting earlier this month has further added to fears of tightening.“Markets are now increasingly pricing in another US rate hike, with expectations for policy easing pushed further into the future,” said TreasuryOne head of market risk Wichard Cilliers.Meanwhile, precious metal miners continue to feel the pressure of rate hike expectations. Rate hikes would make gold relatively less attractive than bonds and currency-denominated assets, since it pays no interest.As gold prices decline for a fourth consecutive month, the JSE precious metals and mining index has plunged by more than 20% in the second quarter of 2026, piling pressure on the overall market.
