Copper plates are prepared for continued transport on a horse-drawn carriage operated by Mopani Copper Mines Plc at the Mufulira Refinery in Mufulira, Zambia, Friday, May 6, 2022.
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copper price It rose to a near six-week high on Tuesday, supported by fresh investor demand and optimism over the possibility of imminent U.S. interest rate cuts.
Copper for September delivery in New York was trading at about $4.223 a pound, extending gains after hitting its highest level since July 22 in the previous session.
Three-month copper london metal exchangeAt the same time, prices also rose slightly to about US$9,378 per ton.
Prices for the red metal have been climbing steadily in recent weeks, retracing losses after hitting four-month lows in early August.
Ole Hansen, head of commodity strategy at Saxo Bank, said copper’s recent gains were partly driven by new demand from hedge funds, which had cut their exposure to the base metal “during the recent deep 24% correction” of exposure.
“We believe the worst of the correction is behind us, but demand fundamentals need to improve before copper can stage a stronger recovery, which may be hampered by lower financing once the (Federal Open Market Committee) begins its long-awaited rate cuts. Cost replenishment inventory support.
“Until then, traders will continue to look for signs of improvement, particularly a reduction in high inventory levels in warehouses monitored by the three major futures exchanges,” he added.
Optimistic about rate cut
Late last week, Fed Chairman Powell enhanced Expectations for the U.S. central bank to cut interest rates at its September 18 meeting are already high.
Powell said on Friday that “the time has come for policy adjustments” but declined to provide precise guidance on the timing or magnitude of a rate cut.
Copper price is seen Loose monetary policy, likely benefiting from U.S. interest rate cuts, is expected to ease financial pressure on manufacturers and construction companies.
A worker bundles copper wire before loading it onto a truck in Huai’an, Jiangsu Province, China.
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The demand for copper is consider broadly Indicators of economic health. The red metal is vital to various sectors, including the energy transition ecosystem, and is integral to the manufacture of electric vehicles, power grids and wind turbines.
Wall Street banks have been bullish on the outlook for copper prices this year, citing supply risks and improving demand for the energy transition metal.
In fact, Citi analysts explain In early April, the second secular bull market in copper this century was underway—roughly 20 years after the first such cycle.
“From a technical perspective, the rally has paused after encountering resistance at the early August highs of $4.22 per pound in New York and $9,320 per ton in London. A breakout would extend to $4.31 and $9,500 respectively,” Saxo Bank Hansen said.
