The copper price has crawled back in the past few weeks as demand remains relatively stable and as the US dollar pulls back. The metal rose to a high of $3.68, which was the highest point since June 30th of this year. It jumped by more than 16.7% from the lowest level this year.
Copper had a difficult performance between March and July as investors worried about demand. The concern was that Russia’s invasion of Ukraine would trigger a major recession this year. The sell-off continued as China announced strict lockdowns in several important cities like Beijing.
Recently, however, demand concerns have waned for several reasons. First, data published this week showed that China’s exports and imports did well in July. As a result, the country’s total trade surplus widened to over $100 billion. This is a sign that business activity in the world’s biggest copper buyer is still robust.
Copper price has also recovered because of the performance of the US dollar. After rising to a 20-year high of $109.30, the dollar index has pulled back to $104.30. The sell-off continued after the US published the latest consumer inflation data. The numbers revealed that the headline consumer inflation dropped from 9.1% to 8.7% in July.
The daily chart shows that copper price has been in a strong bullish trend in the past few days. Along the way, the metal has managed to move above the 25-day and 50-day moving averages. In addition, the Relative Strength Index (RSI) has moved above the neutral point.
Therefore, copper will likely continue rising as bulls target the important resistance point at $3.9620, which was the lowest level on August 17th. This price is about 8.7% above the current level. However, a drop below the support level at $3.4650 will invalidate the bullish view.
This post was last modified on Aug 11, 2022, 09:12 BST 09:12