Copper Explodes As Risk-On Trading Takes Hold
Copper Soars Midweek
Copper prices are exploding higher on Wednesday, with the futures market seen breaking out to 13-week highs. The move comes amidst a wave of risk-on trading as traders cheer the easing of tensions between the US and Iran. Trump announced yesterday that he was pausing Project Freedom while the Iranian Foreign Minister was heard citing good progress in peace talks. As such, there is now a growing view that the two sides, helped by China could be on the way to agreeing a peace deal in coming weeks, avoiding the return to war which looked at risk of materialising at the start of the week.
Weak Dollar Helping Copper
The US Dollar has fallen sharply mid-week, tracking the move lower in energy prices, which is helping feed into better copper demand also. In terms of other supply/demand factors affecting copper prices, news that China has restricted exports of sulphuric acid (a key input for copper refining) has hit supply projections in Chile, the largest global producer of copper. As the impact of the Iran war continues to impact production and distribution, copper prices look poised to continue higher near-term until we hear any news that Iran is properly reopening the Strait of Hormuz for foreign commercial vessels.
Technical Views
Copper
The rally in copper has seen the market reversing sharply higher off 5.8550 support, now breaking out above 6.1020. While above here, focus is on a test of the 6.2845 level next ahead of the record highs above at 6.5830.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% and 74% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
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.