The copper prices extended its decline for eight consecutive days. Prices fell below a three-and-a-half-month low, more than 1.5 percent, on stronger consumer demand and risk appetite in China.
Three months of copper on the London Metal Exchange HG1! fell 0.1% to $9,161 a tonne, the lowest since April 3. The most traded September copper contract on the Shanghai Futures Exchange HG1! lost 0.5% to 74,950 yuan ($10,302.55) a tonne, also the weakest since April 3. MCX Copper was trading at 788.25, down 0.90%.
Lower-than-expected second quarter economic growth and a lack of targeted stimulus to boost China’s ailing property sector from last week’s policy meeting sparked sell-off in metals.
Broadly, investors switched off risk appetite as they assess a possible U.S. administration led by Donald Trump might set more trade tariffs, impacting demand and the global economy. However, the falling prices encouraged more demand in the spot market, which will lead to a gradual decline in copper inventories in China.
The yangshan premium (SMM-CUYP-CN), an indicator of import demand, rose to a three-month high of $18 per ton on Tuesday.
Looking ahead, the first reading of the US Gross Domestic Product (GDP) for the second quarter is due later today. The attention will shift to the Personal Consumption Expenditures (PCE) Price Index data for June on Friday. Any further signs of cooler inflation might spur the rate cut expectation by the US Federal Reserve (Fed) and could exert some selling pressure on the USD.
Technical Outlook of Copper Prices
Copper traded at 788.50 today, down 0.93%. Yesterday, prices fell to 795.65, compared to Tuesday’s close of 807.00.
Starting in mid-July, prices fell and were steep, almost 9%. Prices recently touched a three-month low of 787.00. The formation of a long descending candlestick indicates the continuation of strong selling pressure. The expected bearish level is 778-775 in the near term.
On the upside, immediate resistance is at 798-815.00.
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