Copper price is enjoying some support from the recorded decline in inventories. Nonetheless, concerns over slow global economic growth continue to weigh on the red metal. Investors are now eyeing further cues from the Fed meeting minutes scheduled for later on Wednesday.
What’s driving the market?
Copper price has had a good month so far; holding steady above the critical zone of $3.50 for about two weeks now. Decline in inventories at warehouses registered at the London and Shanghai exchanges has boosted the commodity’s prices. For instance, the latter group of warehouses recently reported a drop in its reserves to a 7-month low.
Even so, concerns over slow global economic growth continue to weigh on the industrial metal. Recent Chinese economic data pointed to the slow recovery of the Chinese economy. Notably, the country’s industrial output and retail sales missed economists’ expectations amid the property market crisis and COVID-19 outbreaks.
Besides, investors are keen on the Fed meeting minutes scheduled for release later on Wednesday. The central bank’s aggressive policy tightening has raised concerns over a probable recession at the US and global level. As such, the aforementioned economic event will avail cues on the Fed’s probable move in its September meeting. Hints at another super-sized interest rate hike may heighten woes over a recession; an aspect that could further weigh on copper price.
Copper price prediction
Copper price was trading within a rather tight range for the second session in a row. On a daily chart, it is trading above the 25-day EMA while remaining below the 50-day EMA. Based on these technical indicators, as well as the fundamentals, I expect the red metal to remain subject to curbed gains for the remainder of the week.
In the immediate term, copper price will likely continue to face resistance at 3.64 as investors await further cues from the Fed meeting minutes. With that, it may continue to find support along the 25-day EMA at 3.57.
Even with further gains, in reaction to the FOMC minutes, I expect the red metal to remain below the resistance level at 3.69; which is along the 50-day EMA. On the lower side, 3.52 will likely remain a steady support for the commodity in the ensuing sessions.