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Copper Maintains Hot Streak On Upbeat Demand Side Outlook

Copper prices hit new all-time highs of $5.07/pound on Wednesday, gaining 3.4 percent in the intraday trading session. The commodity is rallying on heightened demand, with the global renewable energy transition at the core of it. Copper has been on a strong uptrend since early March, and the momentum is likely to continue in the coming weeks.

The world has increased its appetite for copper as many governments and companies push to achieve net-zero carbon emissions target. The metal is a key component for many industries, and is used for electrical wiring and manufacture of multiple electrical equipment and machine components. Some of the leading consumers of copper include electric vehicle (EV) manufacturers and the construction industry.

The demand for copper is typically used as a barometer for the global economic performance. In this case, China, which is responsible for about 50 percent of all global copper consumption, has seen its economy return to the growth trajectory after initial turbulence at the beginning of the year. Also, China’s Ministry of Finance announced on Tuesday the issuance of ultra-long bond worth 1 trillion yuan to fund infrastructural development. That precipitated bullishness in the market, as investing in such scale will likely trigger a significant spike in the demand for copper.

Elsewhere, the Federal Reserve is expected to cut interest rates at least once in 2024. This will likely prop up the price of copper.

However, despite the rosy demand-side picture, some analysts opine that the commodity is likely in the overbought territory, and a price reversal could be in the pipeline.

Technical analysis

Copper price is on an upward momentum and will likely pivot at 5.03. The buyers will likely face the first resistance at 5.08, but a move beyond that level could favour them to advance further up to test 5.12. However, if the price breaks below 5.03, the sellers will likely take control. In that case, the first support will likely be at 4.98. A move below that mark will invalidate the upside narrative and signal the potential for further declines to test the second support at 4.93.