Copper retreated from two-year highs – will it fall further?

Copper retreated from two-year highs - will it fall further?

The price of copper fell by more than one percent yesterday. It was the third straight day of declines, with prices under pressure as the market rose to a two-year high on speculation, while physical demand in China remains weak.

Copper fell to 843.35, retreating from a two-year high of 876.46 on April 29, as commodity funds took gains and weighed on the outlook for US output.

In addition, US ISM data showed that US factory activity unexpectedly contracted in April, erasing earlier hopes that the sector would gain traction, weighing on the outlook for base metals.

Three months of HG1 copper! On the London Metal Exchange (LME), it was down 1.5% at $9,750 a tonne, from a two-year high of $10,208 on Tuesday.

A weak signal from top metals consumer China, such as the Yangshan copper premium which reflects demand for copper imported into China. That premium dropped to zero last week from $42.50 a ton at the start of April, and was last quoted at $5. On Tuesday data showed that growth slowed in China’s manufacturing and services sectors in April, suggesting a loss of momentum for the world’s second-biggest economy.

China’s copper producers are planning to export up to 100,000 tons of the metal, sources told Reuters.

Today, the release of key U.S. nonfarm payrolls to be release, which is likely to factor into the outlook for interest rates.

Technical Outlook – Copper

Copper prices turned from the high 876.45, prices touched a low 843.35 yesterday. Dropped over 3% since 30 April 2024.

Formation of a long bearish candle stick on the above chart is indicating for a negative momentum in days to come. Adding to this, RSI 14 and its 9 SMA is also giving a bearish crossover. However, prices would need to break immediate support 842.20 in order to test next support 835-828.00.

Alternatively, prices may recover towards 855-865 again in a near future.

Happy Trading!!

Commodity Samachar
Learn and Trade with Ease

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