Will copper prices struggle to break key resistance?

The price of copper fell to the highest level of the day on Friday. Prices fell more than 1.5 percent on concerns about oversupply and subdued demand in top metals consumer China, where the currency is also weakening.

Three-month copper HG1! on the London Metal Exchange fell 1.5% to $9,709 a metric ton after three days of gains. The metal used in power and construction has shed 13% since touching a record peak above $11,100 last month. U.S. Comex copper futures (HGc2) dropped 2.3% to $4.46 a lb.

Further, China’s yuan dipped to a seven-month low against the dollar on Friday, hurt by portfolio outflows from mainland financial markets and speculation that the central bank is allowing the currency to weaken gradually.

A weaker yuan usually weighs on industrial metals because it makes commodities priced in the dollar more expensive for buyers in China. But Hansen said the impact could be offset because it may have also spurred some stockpiling.

An overhang of metals has weighed on the copper market, with SHFE copper stocks up tenfold since the start of the year to 322,910 tons, reflecting the abundant supply in China.

Data showed the global refined copper market had a surplus of 13,000 tons in April and excess supply of 299,000 tons in the first four months of the year.

Adding to this, The U.S. dollar rose Friday to new highs with the Federal Reserve sounding more hawkish than its European peers, The latest numbers on the housing and labor markets were soft, and the upcoming PMI data, due later in the session, are expected to show a slowing in activity.

However, Fed officials continue to call for caution and more data before agreeing to cut interest rates, and the last meeting of the U.S. central bank saw the forecast of rate reductions this year cut to one from three previously.

Technical Outlook: Copper

The copper prices retreated from the day’s high 861 and settled at 847.20, down 1.71% on Friday.

Since 14 June 2024 prices struggling to break its key resistance 865 and consolidating above the crucial support 840.00. Further, prices trading below its short-term moving averages. RSI is currency trading below 50 levels.

Hence, prices expected to remain in above consolidation zone. Unless it gives either side break. On the upside, a break above 865 will open the door for 875-888.00

On the downside, a break below 840 will add pressure for the support level of 825-818.00

Happy Trading!

Commodity Samachar
Learn and Trade with Ease

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