Copper price is up by more than 0.50% as investors remain optimistic a coronavirus vaccine. The metal is trading at $3.0463, which is slightly below the year-to-date high of $3.0732. Other metals are also rising today, with gold, silver, and palladium rising by more than 0.20%.
Copper has been in a strong upward trend after bottoming at $2.0700 in March this year. This drop happened as investors started to price-in weak demand for the metal because of the coronavirus pandemic. At the time, most countries were implementing lockdown measures aimed at slowing the spread of the disease.
Copper price started to rally as investors started to learn more about the disease and more companies started to unveil their vaccine. As a result, global stocks and metals rose as the US dollar fell to the lowest level in more than two years.
For starters, copper is used to manufacture electrical wires and other electronic items because of its conductivity and ductility characteristics. As a result, the metal is used as a barometer for the world economy. Furthermore, its demand tends to rise when the economy is doing well.
Meanwhile, copper price has rallied because of lower supply as companies were forced to close their mines. This coincided with the launch of stimulus packages worth billions of dollars. As such, investors believe that some of these funds will go to infrastructural projects of which copper is a major component.
However, some analysts are warning that copper price could follow crude oil lower. In an interview on Friday, Mike McGlone, an analyst at Bloomberg argued that copper was getting overbought, which could see its price fall. He argued that copper had a strong correlation to the Nasdaq 100, which has been embattled recently. As such, he believes that the price will fall if a correction in the Nasdaq happens.
Copper price technical outlook
The daily chart shows that copper price has been moving sideways in the past few days. In the past week, it has remained between $2.9485 and $3.0938. The price remains above the ascending purple trendline. It is also above the 50-day and 100-day EMA and the July 13 high.
Therefore, at this point, the outlook for copper is neutral considering that it has just moved above the psychologically-important resistance of $3.000.
As such, the key levels to watch are last week’s high of $3.0893 and the support at $2.9506. A move above the resistance will push the price higher while a break below the support will mean that bears have prevailed.