Copper price movements in recent sessions appear to confirm my assertions in a previous article that indeed the market has been running ahead of itself. While I expect it to continue finding support in the US dollar’s curbed gains and the forecast supply/demand imbalance, concerns that higher interest rates by the Fed may last longer are weighing on the red metal. Besides, the Chinese property market’s challenges are poking holes on optimism regarding the country’s recovery from COVID-19 restrictions.
On the one hand, the fundamentals remain strong and are largely behind the steady support at $3.7500 per pound. Even so, concerns over higher-for-longer interest rate hikes by the Federal Reserve continue to weigh in the red metal. Financial markets are pricing in this setup; an aspect that explains why the US dollar has lacked enough momentum to break the resistance at $104.00.
As it is, copper price will get some support from the dollar’s curbed gains. However, crucial economic data in coming weeks will likely shape the trajectory for the US dollar and the industrial metal by extension.
At the same time, reduced consumer confidence and concerns that the hyped up Chinese recovery might disappoint is yet another proof that copper price had been running ahead of itself. Persistent challenges in the Asian country’s property market is one of the aspects that has poked holes in the optimism that boosted industrial metals at the start of 2023.
Copper price prediction
Amid the uncertainty that continues to impact financial markets, copper price remained range-bound in early Thursday trade. Granted, COMEX futures dropped by close to 3% on Wednesday. As at the time of writing, it was up by 0.94% at 4.0480.
A look at its daily chart shows that copper price continues to trade between the 25 and 50-day EMAs. Indeed, I expect the range-bound trading to persist for a while longer.
While I forecast that the red metal will remain under pressure in the ensuing sessions, the bulls will remain in control for as long as it continues to trade above 3.7500. More particularly, the range between 3.9645 and 4.1025 will be worth watching in the ensuing sessions.
Further losses past the range’s lower border will likely place the support level at 3.8745. On the upside, I expect the potential rebounding to be curbed at 4.1855.