Copper Gaps Lower As Demand Concerns Return
Copper Down From Highs
Copper prices are on watch today after the futures market gapped lower, reversing from yesterday’s highs. The market had been pushing firmly higher, boosted by better optimism as US/EU trade war risks faded and benefiting also from a weaker US Dollar. USD had fallen heavily as JPY surged in response to rising speculation of possible joint intervention from the Fed/BOJ. This backdrop had been supportive for copper prices initially this week before focus turned back to weaker demand prospects, tempering bullish momentum for now.
Chinese Demand Fades
Last week, data showed that copper inventories in Shanghai rose to their highest levels on record. The news underscores demand fears which have emerged in recent months amidst the ongoing rally in copper. The futures market last week broke out to new all-time highs, with many suggesting that demand will continue to fade while prices remain so high.
Bullish Risks
Despite these demand concerns, while USD remains weak there is room for copper to make a fresh push higher. Indeed, if USD continues to sell off this could well see copper prices at new highs again in coming sessions. With global risk appetite improving on the fading of recent geopolitical tensions (US/EU trade war namely), the outlook for copper remains bullish for now.
Technical Views
Copper
Following a failed downside break of the bull channel, copper prices are now back above the 5.8550 level, keeping the focus on fresh upside. 6,1090 remains the key hurdle for now, with fresh highs seen above. If we do break lower instead, however, 5.4415 will be the next key support to note.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.