Copper shows outpacing growth

29 March 2023 178
Copper shows outpacing growth

Unlike many other commodities, copper is now above the levels seen before the banking crisis. The distinctive feature of the movement is the upward exit from the bullish flag, which suggests a further upward movement of the metal.

 

Such a scenario would be favorable not only for copper, but also for the rest of the commodities. Since the red metal is an indicator of the world economy, its growth might signal that the economic situation is not that bad. A self-fulfilling effect might work, in which investors believe in growth of assets, and they actually grow. But this growth might be due to their belief only.

 

Analysts are still looking positively at the prospects for copper.

Some optimistic commodity forecasts were made separately by Trafigura's top executive and Goldman Sachs analysts at the Financial Times Commodities Global Summit.

According to some analysts, the main focus is placed on supply rather than demand, so market participants are optimistic about copper.

 

Last week, Rio Tinto's head of copper department Bold Baatar said the short-term outlook for copper is "quite favorable." His statement is supported by a declining trend in global inventories and production disruptions that have led to lower supplies from Latin America.

 

China Association of Automobile Manufacturers (CAAM) reports that in February vehicle production and sales increased by 11.9% and 13.5% year-over-year, respectively, and by 27.5% and 19.8% compared to January's figures.

As vehicle production increases, so does the demand for industrial metals such as copper, aluminum, nickel, and zinc.

 

According to the technical analysis, the copper price has moved up out of the flag pattern. The price has a further potential for growth. The growth target for now is rather modest for the next trading days. The target will be the level of the local highs of copper at 9,090 dollars. A stop-loss will be placed when the price goes below the current consolidation, which is the level of 8,830 dollars.

 

Growth in the price of copper:

Take profit — 9,090

Stop-loss — 8,830

This content is for informational purposes only and is not intended to be investing advice.

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