Copper price jumped by more than 0.35% as traders reacted to the upbeat manufacturing PMI numbers from China. The metal is trading at $2.6890, which is close to its highest level since January this year. Other metals like gold, silver, and platinum are also rising.
Copper is an important industrial metal used in various industries. The metal, known for its conduction and ductility, is mostly used in the electric industry. According to estimate, most people used products made from copper directly and indirectly every day.
China is the biggest consumer of copper in the world. As such, traders pay close attention to the performance of the Asian giant to predict the future movement in price. As such, copper price rose today as traders reacted to the Chinese PMI numbers.
According to China Logistics, the manufacturing PMI in May was at 50.6 in May from 50.8 in April. This was better than the expected decline of 50.4. While the PMI was relatively weak, it remained above 50, which is a sign of improvement.
The agency noted that 5 of the 13 sub-indices declined from the previous month. For example, output index declined by 0.5 points while purchase of new inputs declined by 1.2 points. Input prices rose above the important level of 50.
Meanwhile, the PMI among large companies was 51.6, up from the previous 51.1. However, that of medium companies fell to 48.8 from the previous 50.2.
Most importantly, new orders, new export orders, and backlogs rose. This is a signal that the economy is picking up, which is a positive thing for copper price.
Later today, we will receive copper production data from Chile, the world’s biggest producer. A sign of weak production could be a good thing for copper price because it will help narrow the world’s supplies. In recent days, the number of coronavirus cases in Chile has been rising, which implies that the supply could start to ease.
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The daily chart below shows that copper price has made a V-shaped recovery from its YTD low of $1.9648. The price is moving in an upward trend, as evidenced by the ascending pink trendline. This line connects the lowest points in March, April 20, and May 27.
Also, the price has just moved above the 78.6% Fibonacci retracement level. Most importantly, it is a few inches below June’s 10 high of $2.70 and is above the short- and longer-term moving averages. Therefore, the price is likely to continue rising as bulls target for the $2.80 resistance.
On the flip side, a move below $2.5275 will invalidate this prediction. This price is at the intersection of the 61.8% retracement and the ascending pink trendline.