Copper price surged by about 54% between March 2020 and February 2021. However, it has since declined to its current $4.04. The downtrend results from China’s decision to ease its buying spree. Last year, the Middle Kingdom pumped $500 billion into its economy to facilitate its recovery from the COVID-19 pandemic. The stimulus resulted in large imports of different commodities including steel, copper, and crude oil.
For copper and other industrial, investors viewed this as the beginning of a commodity supercycle. However, the Asian country has recently pulled back from the buying spree; an aspect that has led to the drop in copper price. China is now focusing on dealing with bad loans and shaping a consumer-led economy.
Investors are now focusing on the proposed $3 trillion US spending package. If it passes into law, the amount will push up copper prices as the country consumes the metal widely in infrastructure, renewable energy, and construction projects.
Copper price is trading sideways for the second consecutive session. Besides, on a 2-hour chart, it is trading alongside the 25 and 50-day exponential moving averages with an RSI of 51. As such, the outlook is rather neutral.
The price is likely to remain range-bound over the several sessions between the upper level of 4.08 and lower level of 4.02. If the bulls manage to push the price past the resistance level, the next targets will be 4.12 and 4.19. On the other end, a move past 4.00 on the downside will have the bears test 3.94.
