Copper price is up by more than 2% today even after tensions between the US and China escalated. The metal is trading at $2.8393, which is a few points above Friday’s low of $2.7720. Other metals are in the green as well, with gold and silver price up by 0.65% and 3.0%, respectively.
Copper price has been in an upward trend in recent months as investors place their bets on a global recovery. The price has risen by more than 18% in the past three months and by more than 35% this year. This makes it among the best-performing metals this year.
For starters, copper is usually a good indicator of the health of the global economy. The price usually rises when the economy is doing well because the situation leads to higher demand. Recently, indication is that global demand will rise.
For example, the Chinese economy expanded by more than 3% in the second quarter after contracting in the first quarter. Recent high frequency data shows that other economies like the US and Europe are also on a recovery path. Most importantly, governments have launched multitrillion packages that will also lead to more copper consumption. The weaker dollar has also helped to support copper price.
Today, copper price ignored the rising tensions between the US and China. Earlier today, China announced fresh sanctions on 11 top US officials in reaction to the US sanctions on Chinese officials last week. The country said that the sanctions were necessary to respond to US overreach.
The tit for tat between the world’s most powerful economies is usually negative for copper prices. In fact, the price underperformed in 2018 and 2019 at the height of the trade war.
Copper price outlook
Copper price is trading at $2.8393. The daily chart shows that the price has been in an upward trend since March, when it bottomed at $1.96. Still, the chart shows that the price has found strong resistance at around $2.9 level.
Therefore, while the trend remains bullish, I suspect that a pullback is also possible because of the triple top formation. This pullback will be confirmed if the price moves below the 50-day EMA level at around $2.75 level.