Copper lost one of its most powerful backers after Goldman Sachs cut its short-term price forecasts in anticipation of a sharp decline in consumer spending and industrial activity amid deepening energy crises in the Euro area.

Analysts at Goldman Sachs were among the most bullish supporters on commodities, and said copper could become one of the tightest markets ever seen. But with investors selling the metal en masse and prices currently 40% below the bank's expectations, it recently warned that the downturn could continue.

Growing dollar demand has put significant pressure on copper, along with the global energy crisis. Even the Bank of America shifted its forecast to $6,700 a tonne in the next three months, compared to the previous $8,650.

From a technical point of view, copper has reached the support level located around $7,000.

Summing this all up, copper has fallen nearly 30% from its March record. Although analysts favored the metal due to limited supplies and its use in fast-growing green technologies, prices have fallen as cuts in energy supplies undermine the economy, especially in Europe.

As mentioned earlier, the Bank of America cut its forecasts last week, warning that in a worst-case scenario where Europe faces widespread gas shortages, prices could fall as low as $4,500 a tonne.

On the London Metal Exchange on Tuesday, copper fell 3% to $7,354 a ton, its lowest close since November 2020. Other base metals decreased as well.

Marcus Garvey, head of commodities strategy at Macquarie Group said the copper market may run into a surplus in the next two years if demand declines and production continues to expand. He added that if there are no new supply shocks, the performance of the metal will depend on global growth.

"The downward spiral in copper price that has gathered momentum in recent sessions reflects increasingly pessimistic growth expectations," Goldman Sachs said. "This latest leg lower has been tied to increasing headwinds to European growth path, in particular from the impact of surging regional natural gas prices on activity," they added.

Goldman Sachs also warned that lower prices may encourage manufacturers to curtail supplies, but those would be needed only during a global recession. Nevertheless, the bank said copper is on track to hit $15,000 in 2025, citing clear structural gains as mine supply peaks. It is expected to cost $7,600 in six months and $9,000 in 12 months, compared to previous forecasts of $10,500 and $12,000.