Copper price rebounded for the third consecutive session on Wednesday in reaction to the better-than-expected Chinese factory activity. Even so, concerns over Fed’s hawkish tilt and slowdown in the global economy remains a key headwind.
Chinese economy
In addition to being the second largest economy globally, China is the leading consumer of copper and other industrial metals. Indeed, the economy’s recovery from the COVID-19 pandemic has been one of the factors driving copper price in recent weeks.
According to data released by the country’s National Bureau of Statistics, China’s factory activity moved further into the expansion zone in February. The official manufacturing PMI rose to 52.6; its highest figure since April 2012 when it reached 53.5. Besides, the number surpassed the analysts’ forecast of 50.5 and January’s reading of 50.1.
Notably, the better-than-expected Chinese factory activity numbers are one of the reasons behind the recorded rebound in copper price. Besides, support from the national government and recovery in the country’s property market is set to continue boosting the commodity.
Nonetheless, uncertainty over the extent of the Fed’s hawkish tilt, coupled with the ongoing recession woes, may continue to curb copper price gains.
Copper price prediction
On Wednesday, COMEX copper futures were in the green for the third consecutive session. This is after dropping to a level last recorded on 9th January 2023 at the beginning of the week. As at the time of writing, it was up by 0.67% at 4.1170.
A look at its daily chart shows that the rebound has placed copper price above the 25 and 50-day exponential moving averages. Based on both the fundamentals and technical indicators, I am cautiously bullish on the red metal.
In particular, I expect the psychologically crucial level of 4.0000 to remain a steady support level for the industrial metal for a while longer. Even so, as was the case a week ago, the bulls will likely lack enough momentum to hit and break the resistance at 4.2500.
More specifically, the support level of 4.0615 will be worth watching in the immediate term as the asset finds resistance at 4.1310. Even with further rebounding, copper price gains may be curbed at 4.2415 in the ensuing sessions.
