Copper price crawled back after tanking to $2.3845 on Friday after China unveiled a new bill on Hong Ko ng security. The price is now trading at $2.435, which is a few points below the Thursday high of $2.4685.
China is the biggest copper consumer in the world. Therefore, a decline in the Chinese economy tends to affect demand.
On Friday, China announced that it was doing away with its GDP forecasts for the year. Analysts believe that this announcement meant that the country will invest less on infrastructure, which are major consumers of copper.
The price is rising today, in line with the overall stock market as investors react to assurances by China. In a statement yesterday, the country said that the new bill was meant to provide more support for Hong Kong and make the city more secure.
In another statement earlier today, the central bank governor said that the bank will continue supporting the economy moderately. He said that the bank will soon launch a new program to support small firms that have been affected significantly by the coronavirus lockdown.
The new measures will help firms delay their loan repayments, increase collateral-free credit to small firms, increase government guarantees, and support bond sales. Analysts believe that these measures will help support copper prices.
Chile is the biggest producer of copper in the world. The country has seen a sudden jump in coronavirus cases, which could disrupt the copper mining business. In a statement yesterday, the president said that the country’s healthcare system was getting to the limit.
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Copper price is soaring for the second straight day today and is now trading at the 50% Fibonacci retracement level on the daily chart. The price is slightly above the 50-day exponential moving average and slightly below the 100-day EMA. Therefore, the upward momentum may continue as bulls remain in control but they will need to defend the previous high of $2.4720.
On the flip side, a move below Friday’s low and the 50-day EMA at $2.3845 will invalidate this trend. It will send a signal that there are still sellers in the market, who will be interested in pushing it to the 38.2% retracement of $2.3270.