Copper Pushing Lower
Copper prices have come under fresh pressure today with the futures market gapping lower at the daily open, now down almost 5% from the week’s highs. The move comes despite broad optimism around the upcoming US/China trade talks this weekend. A stronger US Dollar is perhaps behind the move with the greenback turning higher on the back of the May FOMC yesterday. The Fed signalled that it will remain patient on rates while it assesses the risks around the ongoing US trade war. Near-term rate-cut expectations have been scaled back accordingly, giving USD some lift today.
US/China Trade Talks
On the trade front, the prospect of a US/China trade deal is firmly bullish for copper and if talks go well this weekend and we see some positive headlines, copper prices are likely to lift next week. However, if trade talks between the US and China falter, this could lead to fresh downside in copper prices near-term, particularly with expectations of an incoming copper tariff in coming weeks.
Goldman Drops Demand Forecasts
Looking further ahead, copper prices are also expected to suffer from a weakening demand outlook across 2025. In a note issued this week, Goldman Sachs warned of a major slowing in copper demand over H2 linked to expected copper tariffs and broader trade tariffs. Against this backdrop, only a trade deal between the US and China is likely to help drive copper prices back to YTD highs.
Technical Views
Copper
Copper prices are back below the bull channel and are now testing the 4.5785 level. With momentum studies turning lower, if price break back below this level, focus will shift to deeper support at the 4.30 level next and the YTD lows below that. Bulls need to get back above 4.8010 to alleviate these risks.
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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.