Glencore share price started the year on a high note, boosted by higher commodity prices. It is trading at 250p, up by more than 7%, becoming the third-best performing company in the FTSE 100 after Entain and Fresnillo.
What happened: For starters, Glencore is one of the biggest miners in the world, with operations in most continents. The company produces commodities like copper, cobalt, nickel, and zinc. It is also a leading producer of coal and a marketer of other commodities.
The rally today is primarily due to the strong performance of commodities. The price of copper, nickel, zinc, and other commodities is up by more than 3%. This performance is due to the relatively weaker dollar and the overall bet that last year’s growth will continue.
Why this matters: In general, Glencore share price has been on an upward trend recently. It has risen by more than 125% from the 2020 low of 110p. This performance has been because of the higher commodity prices driven by a resurgence Chinese economy and the weak US dollar. As a result, investors believe that the company will restate the dividend it scraped last year.
Glencore share price has also rallied after the company welcomed a new CEO after more than two decades. His goal is to transition the firm to clean energy, by exiting the coal business that brings about 10% of its revenue.
Like all commodity companies, the performance of Glencore will depend on the performance of commodities. In my view, I believe that the prices will cool substantially this year as investors shift to a risk-off sentiment.
Technically, the shares remain above the 50-day and 200-day exponential moving averages. The two made a golden crossover on November 30th. Also, the Relative Strength Index (RSI) has remained above 70. Therefore, in the near term, Glencore stock price will possibly continue rising as bulls aim for the next resistance at 280p. The shares will then drop possibly to 200p.
