Copper prices plunged drastically, and dropped below its January 2023 month low. Uncertainty over the debt ceiling and hawkish comments from Fed officials that indicated a rate hike in June remains a possible put pressure on commodity prices.
The dollar index which tracks the greenback against a basket of six other currencies, edged higher towards two month high adding in recent pressure.
Furthermore, Preliminary manufacturing PMI numbers from the U.S., Euro Zone and the UK remained subdued in May. The readings indicated a consistent slowdown in global manufacturing activity this year, which weighed on the sentiment.
The red metal dropped nearly 5%, since the start of the month. Prices continued trading under pressure after recent data showed an unexpected slowdown in Chinese manufacturing activity. The largest copper importer in the world, China is currently battling to support economic growth as it emerges from three years of COVID lockdowns.
While the central bank has signalled a potential pause in the rate hike cycle. And also expected to keep rates at near 15-year highs for the remainder of the year, as inflation remains sticky.
By raising the opportunity cost of storing non-yielding assets, higher interest rates put pressure on metal prices. This trend has battered metal prices through 2022 and is expected to keep the pressure on this year.
Now, today the U.K. Inflation numbers and U.S FOMC meeting minutes will have a significant impact on metals prices.
Technical View
Copper prices extended its fall yesterday also and dropped below January 2023 month low. Yesterday, prices settled at 712.60, down by 0.67%.
As per the view given on 18 May 2023, prices turned negative and hit both predicted level of 718-710.00
Please refer link for the detail – https://commoditysamachar.com/copper-prices-recover-from-five-month-low-what-next/
On the above daily chart, prices breached its all crucial support and now trading on the verge of decisive level 701.80. A break below on a closing basis will expect to witness a new crunch and its prices may test 693-685 very soon.
Alternatively, prices may consolidate in between 710-715 levels, before next any move.
On the upside, massive resistance is seen at 722.50 above it 729.50-735.00
Further, Prices may react strongly in the U.K. Inflation numbers and U.S FOMC meeting minutes, both data and events scheduled to be released later today.