Copper Price: Slowdown fears underpin the worst week in a year despite recent bounce off $3.72
|- Copper prices dribble around the lowest level since early 2021.
- Fitch cites recession woes, central bank action and China to expect further losses.
- Resolution of labor issues in Chile adds strength to the bearish bias.
- Light calendar, quiet session triggers corrective pullback but bears keep reins.
Copper Price remains on the back foot, pointing to the worst week in a year, even as the red metal recovers from of 18-month low heading into Friday’s European session.
That said, the copper futures on COMEX print around 1.30% daily gains as corrective pullback jostles with $3.72 by the press time. Elsewhere, the three-month copper contract on the London Metal Exchange (LME) seesaws around the lowest since February 2021, close to $8,400, while prices of the most active contract on the Shanghai Futures Exchange (SFE) remain pressured at around 63,830 yuan per metric tonne.
While portraying the challenges for the red metal, the global rating agency Fitch said, “We expect base metals to extend losses following their recent fall caused principally by the Fed's tightening and China's economic slowdown on the back of the country's zero-COVID policy.”
“A stronger U.S. dollar and weaker global economic growth will cause a significant drop in demand across base metals. Risks are broadly skewed to the downside,” the note also mentioned.
It’s worth noting that, Fed Chair Jerome Powell’s concern for recession joined downbeat US PMI data to weigh on the commodities the previous day. However, the mentioning of inflation and recession woes as the challenges to ensure a smooth landing, despite expecting firmer growth this year, weigh on the US Dollar Index (DXY) afterward and triggered the metal’s corrective pullback.
Looking forward, updates concerning central bank moves and recession will be important to watch for clear directions.
Technical analysis
Copper prices are likely to witness further declines as bears managed to conquer the late 2021 swing low surrounding $3.97. The same directs the commodity sellers towards the 50% Fibonacci retracement of March 2020 to 2022 upside, around $3.56. It’s worth noting that the recovery moves past $3.97 and will need validation from the $4.00 before eying further upside.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.