Copper Price Unrelenting Rally Gains Steam – Eyes 2017 High

Copper price is up by almost 1% today as investors digest the recent vaccine news. The metal is trading at $3.22, which is a few points below its highest point since June 2018. Other base metals like tin, zinc, and aluminum are also rising while gold and silver are falling.

Copper is sending mixed signals

Copper is often viewed as a barometer of the world economy because of its many uses in the electrical industry. Therefore, its recent rally has surprised many watchers, considering that most countries are going through their worst economic crisis in decades. The price of copper has risen by more than 63% since its bottom at $1.9 in May.

This rally is mostly because of several reasons. First, after peaking early this year, the US dollar has been in a strong downward trend. Today, the dollar index is trading at $92.24, which is substantially lower than this year’s high of more than 103. Since copper is priced in dollars, the weakness of the greenback has played in its favour.

Advertisement

Second, due to the Covid pandemic, many copper producers, including those in Chile have had to lower their output. As a result, there is a possibility that the industry will face a deficit this year.

Third, governments, including the United States and the European Union have announced significant stimulus packages. In the US, more stimulus could come once Biden becomes president, which will help support the price of copper.

In recent weeks, copper price has rallied mostly because of the signs that a vaccine. Just last week, Pfizer announced that its vaccine was 90% effective. And this week, Moderna had similar news. Analysts now expect that AstraZeneca, too, will make a similar announcement soon. A vaccine is a positive thing for copper prices because it will lead to more demand.

However, there are still challenges considering that the number of new infections in most countries is rising. The US has already crossed the 11 million mark while European countries are reporting new infections in the thousands.

Copper price technical outlook

On the weekly chart, we see that copper price has been rising steadily since May this year. At the current price of $3.22, the price is a few points below the 2018 high of $3.31. The price is also slightly above the 2019 high of $2.98. It is also above the 28-day and 50-day moving averages.

Therefore, on this long-term chart, I suspect that the price will continue rising, with the next target being at $3.31. But, if it reverses to $2.98, this bullish thesis will be invalidated.

Don’t miss a beat! Follow us on Telegram and Twitter.

Copper technical chart

Copper price

More content

Related Posts: