By Jim Williams
Copper prices have remained mostly steady so far this week as investors wait for the other shoe – the Federal Reserve – to drop. The Fed is expected to announce it is keeping rates steady at the end of its two-day policy meeting this afternoon.
The U.S. dollar has retreated ahead of today’s expected news from the Fed, but all eyes may need to look ahead to next week’s British vote deciding whether they will stay or leave the European Union.
“Markets will be focused on what Janet Yellen has to say about the timing of the next rate hike,” Ric Spooner, chief market analyst at CMC Markets in Sydney, told Reuters. “However, this may become irrelevant if Britain does vote for Brexit and markets react negatively into July.”
The vote is next Thursday, June 23.
Rising Inventory Levels
The economy isn’t the only thing keeping the price of copper in limbo. In fact, most all other commodities are surging thanks to the weaker dollar. One of the main reasons copper is keeping the status quo is the surge in inventories at London Metal Exchange warehouses we told you about last week.
The chart below shows copper warehouse levels in the LME system rose by almost 40% on the month to date after experiencing the highest two-day inventory surge in over a decade.
Frequent contributor Andrew Hecht from Seeking Alpha wrote an interesting article this week on the price of copper that may leave you wanting to order Chinese takeout after reading. In the article he talks about the overall state of the red metal.
“The current weakness in copper alongside increasing open interest tells technicians that we could be looking at a lower copper price in the coming weeks,” Hecht writes. “Critical support for copper is at the psychological $2 level and then at the January lows of $1.9355 per pound which was the lowest price since April 2009.”
You can read the entire article, and see how he mixes in General Tso’s chicken into the copper conversation, here.
Highs and Lows of Copper
52 Week Low $1.94/lb
52 Week High $2.62/lb
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