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Copper Round Up – All Eyes Are on the Fed

By Jim Williams

Investors around the world are keeping an eye on the Federal Reserve's two-day meeting, which starts today. The FOMC is expected to raise the central bank's benchmark rate by a quarter percentage point, marking the second increase this year.

Those with an interest in copper want to know how much of an impact the Fed's decision will have on the price of the red metal. Copper closed Friday at a two-month high. Early trading this week has been mixed ahead of the Fed's meeting.

Another question is, how much of an impact will the Fed's decision make around the globe? Many think China's central bank will make a knee-jerk reaction if the Fed does hike the rate as expected and raise short-term interest rates in China as well.

Regardless of what happens over the next two days, copper had a pretty good run last week, thanks in part to data released in China on Thursday.

The world's largest consumer of copper (see chart) reported stronger-than-anticipated exports and imports for May on Thursday. This is good news for the market as the data suggests China's economy is doing better than expected.

Traders are also watching stock levels in the London Metal Exchange (LME) bounce back and forth. Inventories recently rose 2,700 tons on Monday after falling nearly 10,000 tons on Friday. Overall, inventories are down more than 20 percent since the first week of May.

For the current price of copper, click here.



Copper Chart by TradingView

Further Reading
Fast forward ten years. Chances are, that car—or bus—next to you will be filled with copper and running off electricity. That's right. An industry report recently released predicts the number of electric vehicles on roads in 2027 will spark a nine-fold increase in copper demand!

You can read the entire Reuters story here.

Strike Out the Supply Issue
Remember when the labor woes at several key copper mines helped fuel a big jump in prices earlier this year? Well, it looks like the fear of a copper shortage as a result of the striking miners wasn't as bad as expected – at least, not for as long as expected. Read more about the impact of the copper disruptions here.

Be sure to come back next week as we follow the Fed, China's reaction and the impact on the price of copper.

 

 

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