Most base metals prices sparked yesterday. Among industrial metals, copper prices jumped back to key levels on Thursday as fears of a banking crisis eased. Markets were also betting on a recovery in key importer China, as it reemerges from three years of COVID lockdowns.
The Federal Reserve hiked interest rates as expected, which resulted in 0.70% intraday fall in the dollar. It tumbled to a near seven-week low to 102.185 points, its weakest level since February 2023.
Weakness in the dollar also supported commodity prices. The prospect of a less hawkish Fed also boosted the outlook for non-yielding assets such as gold and metals.
Adding to this, Copper prices rebounded yesterday, but due to little change in consumer demand, downstream buyers kept limited gain. Refineries were not willing to sell cargoes, and the overall transaction was quiet. In terms of consumption, due to the limited increase in demand, most of the trades were done at lower prices, and it is expected that there will be little demand improvement in the short term. Copper prices rebounded sharply as the market awaited Fed interest rate hike.
Further, the Pound rose 0.4% to 1.2313, near a seven-week high, ahead of the latest Bank of England’s latest policy-setting meeting. BOE Governor Andrew Bailey hinted earlier this month that the policymakers could be looking to pause its rate-hiking cycle, but the latest U.K. inflation data makes that look very unlikely. It’s expected that any favorable statement from BOE will support base metals prices today.
Technical View- Copper at massive resistance
Copper prices traded positive with 0.79% gain today. Since 13 March 2023, prices turned positive from the low of 738.30 and recently made a high of 771.20.
On the above chart, prices are trading on the verge of a bullish pennant pattern. A break above 775.50 will open the door for 785-795 in days to come.
RSI 14 and its 9 SMA are also giving a positive cross over. Further, Prices above its short term moving averages.
Hence, the copper trend looks positive if it breaks 775.50. Projected target would be 785-795
Alternatively, failure of the break above 775.50 only will create a probability for some retrace. And copper prices may test immediate support 762-755 again.