The Copper price rose by more than half a percent on Friday. Prices were supported by a slight weakening of the US dollar, while markets appreciated weak near-term demand and continued concerns about long-term deficits.
In addition, copper production was supported by supply-side issues such as the forced closure of Panama’s Cobre mine and Anglo American’s decision to sharply reduce copper industry production. Anglo American, also reducing its annual copper production target by nearly 25% due to rising operating costs.
Additionally, the Copper price have depressed recently by the surprise decision of the PBOC. to keep key interest rates unchanged and the possibility that the US Federal Reserve will soon cut interest rates.
Today, the People’s Bank of China (PBoC) kept the lending prime rate (LPR) unchanged across the board. The People’s Bank of China held the one-year and five-year LPR constant at 3.45 percent and 4.20 percent.
Both LPR rates fell to historic lows in the past four years as the central bank saw monetary policy ease as economic growth slowed.
The move was largely in line with market expectations after the central bank unexpectedly kept its medium-term lending rate on hold in early January, although it also maintained a record increase in liquidity.
The LPR is set by the PBOC at the discretion of 18 selected commercial banks and is used as a benchmark for lending rates in the country.
The PBOC has also repeatedly expressed its reluctance to cut the LPR further, arguing that such a move could weaken the yuan and destabilize the banking sector as well.
The central bank’s liquidity measures are doing little to support the economy, so investors have increased Beijing’s demands for more targeted fiscal policies. But such measures also seem unlikely given China’s high levels of public debt.
Technical Outlook – Copper Price
Since January 12, 2024, copper has risen from a low of 711.50 and reached a high of 718.15 on Friday. Prices stabilized at 717.80 compared to the previous day’s close of 713.35.
On the above chart, prices found trading above multi-day support at 710.50 and formed a long bullish candlestick. Additionally, RSI 14 and its 9 SMA indicate a bullish transition.
All the above technical aspects point to the positive side of the near future. Therefore, prices will soon start testing at 722.50-728.50.
Alternatively, crucial support for the bearish cycle is seen at 710.50, and prices close below this can pull back to 705.50-700.0
Traders can go long with above target this week
Commodity Samachar
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