By Bloomberg News

(Bloomberg) -- Copper surged by the most in more than 16 years as metals extended a dramatic start to the year fueled by a wave of intense speculative trading in China.

Investors are piling into base metals on the Shanghai Futures Exchange on expectations for stronger US growth and more spending on data centers, robotics and power infrastructure. That’s spurring global prices higher, with copper soaring as much as 7.9% on the London Metal Exchange to a record high of $14,125 a ton.

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The Shanghai bourse is China’s top commodities trading platform, and periodic bouts of high-volume trading on the exchange have often triggered major moves across global markets. January was already the busiest month on record for the SHFE’s six base metals as of last week, and copper racked up its second-biggest daily trading volumes ever on Thursday.

“This is all driven by speculative funds,” said Yan Weijun, head of nonferrous metals research at Chinese trader Xiamen C&D Inc. “It’s likely all Chinese money given the surge is in Asian hours.”

It’s been an eye-watering few weeks for commodities, which have been aided by a sinking US dollar, rising demand for real, physical assets, and elevated geopolitical tensions as the Trump administration follows a more assertive foreign policy. Most recently, speculation that the next Federal Reserve chief will be more dovish than Jerome Powell has aided the rally.

In addition to copper —  a material that is vital to the energy transition — precious metals have hit all-time highs. Even crude oil, which was weighed down last year by concerns about a worldwide glut, has risen in recent weeks.

“Commodities are taking turns to rally,” said Eric Liu, deputy general manager of ASK Resources Co. “Copper has been hovering around $13,000 and funds have been brewing over the metal for some time.”

Copper jumped 6.4% to $13,922.50 a ton on the LME as of 8:19 a.m. London time. Its intraday move was the biggest since 2009 — when China was rolling out massive stimulus measures in the aftermath of the great financial crisis. SHFE futures closed up 5.8% at 109,110 yuan ($15,707) a ton. Other metals rallied, with aluminum rising 1.8% and zinc advancing 3.3% in London.

Fed Chair Powell talked up a “clear improvement” in the US economic outlook as the bank kept borrowing costs on hold on Wednesday. His tenure ends in June, after which President Donald Trump may be better positioned to step up his campaign for lower rates.

“Under the cycle in which the US maintains interest-rate cuts, the expectation for upward movement in copper prices has not changed,” said Chi Kai, chief investment officer at Shanghai Cosine Capital Management Partnership. “As for how high prices can rise, there is no clear expectation as long as the US continues to push AI, chips and power construction.”

Investors have been flocking in particular to metals needed in major growth markets. Tesla Inc.’s plan to spend $20 billion this year shifting resources to robotics and AI has underscored investment prospects. Copper, aluminum and tin would all be beneficiaries.

But more traditional commodities also benefited, with iron ore futures in Singapore gaining 2.2% to $105.10 a ton.

The broad-based advance in metals came after a gauge of the US currency sank to its lowest level in more than four years, with Trump signaling he was unconcerned by the weakness. That slide makes commodities more attractive for many buyers.

There are plenty of voices warning that the spectacular gains in metals have run ahead of real-world demand. There’s likely a “technical adjustment” coming as physical buyers in China balk at higher prices, Goldman Sachs Group Inc. co-head of China equities Trina Chen told Bloomberg TV on Wednesday.

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