Copper Higher Amidst Tight Supply Backdrop
Copper Higher on Friday
Copper prices are attempting to push higher again on Friday with the futures market rising to fresh highs for the week. The move comes amidst better risk sentiment on rising optimism that the US and Iran will soon agree a peace deal. Trump signalled this week that negotiations had entered their final stages and was confident a deal would soon be agreed. Iran is reportedly reviewing the latest proposal submitted y the US though has not yet responded. Given the prior rejections so far, risks that the deal fall through remain high. However, if Iran shows a willingness to compromise over the Strait of Hormuz and its nuclear energy program (the two main flashpoints), this could signal to traders that a deal is achievable, boosting copper as risk assets rally in response. In this scenario, USD and energy prices should fall heavily lower, boosting demand for copper. However, if Iran rejects the deal and no immediate counter-proposal is submitted, this could see copper prices sharply lower as risk sentiment unravels.
Copper Supply Remains Tight
Away from developments in the Middle East, copper prices are also rising on stronger fundamentals this week. Earnings updates from mining companies suggest that the supply-demand imbalance in the market is unlikely to be resolved anytime soon with output expected to fall short of expectations. As such, provided we see no fresh rally in USD, copper prices should continue higher near-term, particularly if bolstered by news of a US/Iran peace deal.
Technical Views
Copper
Copper prices have pushed back up above the 6.2845 level, still supported by the rising trend lines from YTD lows and last year’s lows. While above the 6.2845 level focus is on a fresh test of the 6.5830 level and a breakout to new highs.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.