Copper prices gained over half percent yesterday on a softer dollar as traders balanced their positions ahead of the outcome of the U.S. presidential election and on stimulus cues from top metals buyer China.
Three-month copper on the London Metal Exchange (LME) CMCU3was up 0.3% to $9,724 per metric ton during official rings. It touched $9,774 earlier for the highest price since Oct. 14.
Volumes are relatively thin for the base metals complex as investors brace for volatility in the coming few sessions until a clear winner of the U.S. election is declared.
The U.S. currency weakened DXY this week after a weekend opinion poll showed Democratic Vice President Kamala Harris with a surprise lead in Iowa, a traditional Republican stronghold.
Dollar traders had priced in a victory for Republican former President Donald Trump, whose tariff and immigration policies analysts say are more inflationary. Last week the dollar index surged to a three-month high at 104.63.
A weaker dollar makes the greenback-priced metals cheaper for holders of foreign currencies, and typically provides support to metal prices.
But the market remained cautious over a potential second term for Trump, who could reintroduce tariffs that threaten to dampen global base metals trading activity like in 2019.
Back then, the Sino-U.S. trade war caused major diversion of copper and aluminium scrap shipments, disrupting trade flows of secondary material.
China is more prepared for the headwinds this time. According to Reuters, China is considering approving an extra stimulus package to save the economy if Trump wins. A meeting this week of the standing committee of China’s National People’s Congress will shed more light on the stimulus measures.
In other metals trading, zinc rose 1.2% to $3,071 a ton. A South Korean court upheld an order to suspend Young Poong’s 00670.KS Seokpo zinc smelter, the world’s sixth-largest, due to improper waste water discharge, the operator said.
Furthermore, China’s yuan slipped on Tuesday, retreating from a three-week high against the dollar hit a day earlier, as some investors rushed to book profit amid uncertainty around the U.S. presidential election. Markets were also anxiously awaiting outcomes of the Federal Reserve rate decision and a meeting of China’s top legislative body this week.
Voting starts later today, but it could be Thursday or Friday Asia time before we have more of an idea of who will likely emerge as the winner of this very tightly contested election, that could impact to the metals prices.
Technical Outlook – Copper Futures
Copper prices gained nearly 1% yesterday, reaching a high of 861.30 and settling at 859.55, up from the previous close of 852.70. Since October 29, prices have climbed over 3% from a low of 833, forming a strong bullish candle indicating near-term buying interest.
A breakout above multi-week resistance at 865.00 could open the door to 870-878 levels.
 Failure to break could see prices retrace to 850-845. Expect big swings as U.S. election polls, along with upcoming China, Fed, and BOE policy meetings, add volatility.
Until then, Happy Trading!
Commodity Samachar Securities
We Decode the Language of the Markets
Also Read:Â The Finale of the US Elections 2024: What Lies Ahead for the Commodities Market? , US election polls will keep volatility high today.
Recommended Read: The BRICS Summit’s Exciting Revelation: Hinting at New BRICS currency and Financial Infrastructure?
Want Help On Your Trades ?
Chat with RM