Copper prices rose due to higher forecasts for government spending in China, which is the largest importer of the red metal.
Also the reason for the growth was a weaker report on employment in the US non-farm sector, which strengthened market hopes for a pause in the tightening cycle of the Federal Reserve.
However, the regulator's representatives said that rates should be raised further amid high inflation in the country. As a result, traders expect a 25 basis point rate increase at the next meeting of the US central bank in July. The hawkish rhetoric of the Fed has stepped up with the imminent release of the US consumer price data on Wednesday.
Rising rates have a negative impact on the metal prices, increasing the opportunity cost of their storage.
On the other hand, copper received support amid investors' hopes for the revival of China's economy. Thus, the copper price may continue rising.
Copper's upward movement may be limited due to increased supply from a major mining country.
Peru's Ministry of Energy and Mines on Monday reported data on copper production in May. Production of the red metal rose 35% year-on-year in the final month of spring.
Monthly production reached 234,781 tons. According to government data, Cerro Verde, Antamina and Southern Copper were the key contributors to the increase in copper production.
The ministry reports that Peru's mining companies have stepped up activity in a bid to help the country maintain its status as the 2nd largest producer of the red metal in the world.
Copper prices are forming an ascending corridor on the H1 timeframe.
In terms of wave analysis, the price is forming the third ascending wave. The breakout of the first wave at the level of 8395 has already taken place. The upward movement may continue in the near term. The next resistance is at the level of 8485.
Signal:
The short-term outlook for copper is to buy.
The target is at the level of 8580.
Part of the profit should be fixed near the level of 8485.
A Stop-loss should be placed at the level of 8270.
The bullish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.
This content is for informational purposes only and is not intended to be investing advice.
