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Copper Sings an Old Tune

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Copper Sings an Old Tune

The red metal is up to its old tricks. The price of copper climbed yesterday as the dollar dropped. Copper, and other base metals, tend to do the opposite of what the dollar does. Copper bucked that trend – yes, pun intended – recently as the dollar climbed so did copper.

Well, now the red metal is humming along and singing from the same song book we are used to. That being said, the industrial metal is still playing the yo-yo game with us. Overall, copper appears to be in consolidation mode, retreating slowly from the nine-month highs struck last week. The red metal touched 2.9809 last week, the highest since June 27. A weekly survey of traders showed participants becoming less bearish on the metal thanks to reports of progress in the U.S.-China trade talks.

“A trade deal could propel demand for the red metal even higher over the coming months which is a reason why copper traded to a high at almost $3 per pound,” states Andrew Hecht of Seeking Alpha. “A trade agreement between Presidents Trump and Xi could send the price back over the $3 per pound psychological level in copper. Therefore, we are likely to see a continuation of volatility in the copper market over the coming month with support at over $2.80 and resistance at the $3 per pound level on the nearby COMEX futures contract.”

Copper opened this morning at $2.94. Click on the chart below for up-to-the-minute pricing.

News Out of China

The dollar is not the only thing influencing the market. The Chinese government said on Monday it would relax residency curbs in many of its smaller cities and increase infrastructure spending to boost economic growth.

On Sunday, China also announced measures to encourage financing for small and medium-sized businesses.

“Given those stimulus developments that we’ve seen over the weekend, the lack of an upward move across the board is quite telling. We feel the stimulus was already largely factored into the market and I think this reiterates it,” Ross Strachan, senior commodities economist at Capital Economics in London told Reuters.

Overall, Asian shares got off to a subdued start this week as investors braced for key events later in the week, including the kick-off of the U.S. earnings season and a crucial Brexit summit, while broader concerns over slowing global growth checked sentiment.

There was some good news on the supply side as production at Peru’s second-largest mine is set to get back to normal after negotiators reached an agreement with locals to lift a mine blockade that had been in place for about two months.

CESCO Week

CESCO Week is under way in Santiago Chile. The main focus of the event is CRU’s 18th annual World Copper Conference. It is touted as the world premier copper conference and attracts over 500 delegates. This CEO-level meeting boasts an impressive delegation of industry decision-makers and is the best opportunity to hear from copper mining and smelting industry leaders.

We will keep an eye on the conference and report any major copper-related news next week.

Further Reading

A Million Tons of Copper May Not Be Enough

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Jim Williams

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