By Anna Isaac 

Copper prices fell Friday, signaling a pause in the industrial metal's surge, on mounting concerns that the rally may have been overdone.

Copper futures for October delivery slipped about 1% to $6,030 a metric ton on the London Metal Exchange. The drop comes as investors struggle to reconcile signs of a global economic recovery with the surge in coronavirus infections in the U.S., which could deal a setback to manufacturers. Trading volumes are lower than usual with U.S. markets closed for the Independence Day holiday.

The fall comes after a rally of over 30% in the metal's price since its rout in March, reflecting optimism about the potential for a sharp economic recovery, as China and Europe lead large parts of the world in easing lockdown measures. That has helped erase most of the commodity's losses for this year.

Copper is considered a barometer for global growth, with traders dubbing it "Dr. Copper" in reference to its ability to augur turning points in the economic outlook. But some market watchers say traders are ignoring the threat posed by the record number of new daily infections in the U.S., and the risk that economic recovery world-wide could slow after the initial bounceback of recent weeks.

"There's a little bit of dislocation between copper's price and the economic reality, partly because it's been an asymmetrical recovery globally," said Wenyu Yao, a senior commodity strategist at ING Bank. "But so far, Dr. Copper did it: it delivered a V-shaped rally."

A revival in Chinese economic activity in recent months has helped propel copper prices higher. The commodity is particularly sensitive to the Asian manufacturing powerhouse, as the world's second-largest economy accounts for a large part of global demand for the metal. The reopening of major economies in Europe is also helping bolster demand for the industrial metal, analysts said.

Copper has outperformed metals such as aluminum and nickel, suggesting that its surge may have been "somewhat exaggerated," rather than tightly linked to supply and demand, according to Daniel Briesemann, a commodities analyst at Commerzbank.

Still, there are few expectations for a sharp correction in copper prices and some strategists expect the market to continue climbing.

Copper prices could reach as high as $6,500 a metric ton in the second half of this year, Bank of America analysts projected in June. Stimulus measures from governments around the world seeking to rebuild their economies would likely push prices higher, they said.

Supply disruptions from scrap collection to ore mining due to outbreaks of the virus may also continue to support copper prices. In Latin America, two major copper producers, Chile and Peru, face climbing infection rates. This has already caused significant supply disarray for the metal and some analysts expecting this to worsen in the coming weeks.

Elsewhere in commodities, Brent crude, the international benchmark for oil prices, fell 1.3% to $42.58 a barrel Friday.

Write to Anna Isaac at anna.isaac@wsj.com

(END) Dow Jones Newswires

July 03, 2020 10:16 ET (14:16 GMT)