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Copper Fall Deepens
Copper prices are coming under fresh selling pressure on Tuesday as the correction lower continues. The futures market is now down around 5% from last year’s highs as geopolitical concerns, economic worries in China and a stronger US Dollar take their toll. Often seen as a barometer for global economic health, the sharp downturn in copper over recent weeks is a worrying signal at the start of the new year fuelling caution among investors.
Global Risk Flows
Conflict in the Middle East is proving a sharp headwind to global risk appetite at the start of the new year. Fears of a broader conflict developing in the region out of the Israel-Hamas war have seen copper prices falling sharply as traders eye a potential downward impact on global demand. Attacks on shipping routes in the Red sea have further heightened trader concerns.
China Economic Concerns
This comes at a time when fears are already peaking over the health of the Chinese economy. A slew of negative data in recent months, as well as serious issues within the financial sector linked to the property sector, have seen traders scaling back their outlook on China. Looking ahead this week, traders await the latest key data out of China with PPI due on Friday.
USD & The Fed
The US Dollar is also a key driver of copper price action here. The recent uptick in USD, linked to expectations that Fed rate cuts might now come later than initially projected, is weighing on commodities prices, including copper. This week, traders will be watching Thursday’s US CPI release which has the potential to drive copper prices lower again if the Dollar is seen rallying on any stickiness in the data.
Technical Views
Copper
The rally in copper prices over late 2023 has stalled for now into the 3.9410 level with price since turning sharply lower. The market is now fast approaching a retest of the broken bear trend line and the 3.6745 level support. This is a key area for bulls to defend which, if broken, will turn focus to the 3.5475 level support next.
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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.