Copper prices dropped towards a two-week low on Monday as the dollar climbed, and pessimism about demand in top consumer China was reinforced by a renewed focus on the country’s troubled property sector.
A stronger US currency makes dollar-denominated industrial metals such as copper more expensive for holders of other currencies, which could reduce demand.
The dollar hit a three-month high against nine other major currencies on Monday as traders made discount bets that the Federal Reserve will cut interest rates aggressively this year after fresh economic data further reduced those odds.
China has deployed a string of policies over the past year to help revive its property sector, which accounts for a quarter of its GDP, but these measures have done little to boost the market. Part of the problem is Chinese banks’ aversion to extending fresh credit to the sector, highlighted by the liquidation of China Evergrande. Until China’s property sector shows signs of sustained recovery, base (metals are) going to remain under pressure, adding that the market was quiet ahead of the Chinese Lunar New Year holiday
Technical Outlook – Copper
Copper retreated from a peak of 737.40, and on January 31, 2024, prices fell more than 2.5%. Yesterday it hit 715.10, the lowest since 01/23/2024, and settled at 715.95, down 0.84%.
The formation of three black crow candlesticks indicates bearish momentum in the near future. Furthermore, prices are trading at the decisive support at 712.00. A break below extends the decline to 706.50-700.00.
RSI at 14 and its 9 SMA gives a negative crossover. Furthermore, prices are trading below the 20 SMA.
All the above factors give a bearish outlook. However, if prices remain above the crucial support of 712.00 at the end, prices can only recover to 719.50-725.00.
Commodity Samachar
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