Copper prices rallied for the 4th day in a row and have blasted off to 7-year highs this Friday. So what could be leading the red metal to quickly becoming one of the best-performing metals of 2020 in a year when it looked dead and buried in March/April?
Huge post-pandemic demand for copper appears to be the main driver for copper prices, with a lot of this demand coming from China. Furthermore, a series of strikes and disruptions along the copper-producing belts of South America have left global inventories far short and unable to meet this demand. Recent optimism surrounding the coronavirus vaccines and the risky sentiment this has generated, has played to the advantage of copper prices.
However, a news report has emerged from Canada to the effect that TransLink, Metro Vancouver’s public transport agency, is testing the use of copper onboard its coaches to sanitize surfaces against the coronavirus. This is part of a pilot project studying the efficacy of copper-based sanitizers and an organosilane protective coating to kill viruses and other pathogens aboard high-capacity public vehicles.
If this study ends up as a forerunner for the development of copper-based sanitizers as part of the arsenal to fight the coronavirus, this may be the perfect end to the year for copper bulls.
Copper price is now 70% higher than its pandemic low attained in March 2021, and now trading nearly 2.4% higher on the day.
Technical Levels to Watch
Today’s spike met resistance at the 6 June 2013 high, located just above 3.3925. A break of this level targets the 22 May 2013 high at 3.4195. This also puts the 21 March 2013 high at 3.4895 in the picture as a possible upside target if the advance continues.
On the flip side, a profit-taking induced pullback from the current resistance targets 3.3220, with 3.3150 and 3.2975 serving as immediate downside targets.
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