Copper prices clawed back some of Tuesday’s losses in the Wednesday session, as Chinese imports reached near-record levels. Copper price is also being helped by dwindling global inventories of the product that have produced a supply deficit.
Copper price bounced back above $3.00 per pound in today’s trading after yesterday’s dip, rising by a marginal 0.07% after hitting intraday highs at $3.0390. Copper price had previously touched off two-year highs on Friday before risk aversion hit the markets on Monday and Tuesday and caused most risky commodities to be sold off. However, markets are now responding to the Chinese trade balance data, which showed that China is now massively importing unwrought copper.
Data released by Chinese Customs showed a modest decline to 668.5 metric tonnes, which was lower than July’s record of 762.2 metric tonnes. However, this level still represented a 65% rise in copper imports over the past 12 months, as China aims to get its economy back on its feet following the coronavirus pandemic in that country.
Analysts are confident that copper price will resume its bull run, as Chinese industries that rely on copper imports are all experiencing a recovery boom.
The XCUUSD daily chart reveals that copper is now testing the 3.0275 resistance level. It will have to overcome this resistance as well as the ascending trendline that connects the tops of 13 July, 19 August and 4/9 September to target the 3.0920 resistance. 3.1255 and 3.1865 form potential resistance targets for the future.
On the flip side, rejection and a pullback at the current resistance could cause a decline towards 2.9795, with 2.8695 and 2.8020 forming additional support levels to the south. A breakdown of the ascending support trendline which connects the lows of 21 April, 15/27 May and 13 August, could provoke a steeper decline which may target 2.7490 and 2.6860.
