Copper Bounces Off Lows on Monday
Can Copper Rebound?
Copper bulls are fighting to drive a recovery rally today with the futures market rising from Thursday’s lows, bouncing off the bull channel support, but still capped by 6.3750 for now. Weakness in the US Dollar is helping with better buying interest today but the turmoil in stock market amidst recent AI investment concerns remains a key threat to demand in copper markets. Copper futures have corrected more than 10% from the summer highs as hawkish Fed expectations and risk market wobbles dented demand.
Chinese Demand
Still, demand in China remains a strong upside driver and with global output down from typical levels as a result of sharply lower Chilean output, there is still a strong case for higher copper prices medium-term. Reduced physical supplies have led to soaring copper premiums as weakened domestic and foreign output struggle to keep up with demand.
AI Concerns
Near-term, focus is likely to stay on the AI story. Given the importance in AI demand expectations to the copper rally this year, the prospect of slower AI business development as a result of the Democrat party taking both houses in the US midterms means that copper will be vulnerable to further downside on any negative headlines or fresh downside in tech markets.
Technical Views
Copper
Copper prices are at a crucial point here having broken down below the 6.3750 level and now testing the bull channel lows. Bulls need to get price quickly back above the 6.3750 level following the bounce off the channel support or risk a channel break towards 6.1090 first and 5.8550 thereafter.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% and 74% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
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.