Copper prices juggle around $4.10, downside remains favored on renewed demand worries
|- Copper prices are expected to find significant offers sooner on lower demand forecasts.
- Fed Powell's statement on stepping up rates by more than two 50 bps rate hikes this year has dueled uncertainty.
- The minimal positives of the zero-Covid policy in China have added concerns over the copper demand.
A gradual upside move from the low of $4.0400 on COMEX may be holding the buyers' bet on the copper prices but follow up of a sheer downside move looks favored as demand worries fueled up by Federal Reserve (Fed) chair Jerome Powell’s statement.
Copper prices are on the tenterhooks as the market pundits are betting over a major slump in the aggregate demand going in the remaining year and hopefully for the next year. Fed’s Powell in his interview with Marketplace national radio program cited that interest rates could be elevated by 50 basis points (bps) each in its next two monetary policy meetings. And, investors should brace for more policy tightening if data turns ugly.
Read: Fed Powell says Fed will fix inflation, calls stable prices 'bedrock' of economy
Adding to that, Powell focused more on bringing price stability as higher inflationary price pressures are hurting the paycheck. No doubt, more policy tightening moves by the Fed will absorb helicopter money from the economy and corporate will spend their costly dollars on much-refined investments. This is going to dent the demand for the base metals significantly.
Meanwhile, the ongoing zero-Covid policy in China to curb the spread of the Covid-19 has raised concerns over the aggregate demand. The restrictions imposed by the administration on the movement of men, materials, and machines in Shanghai and Beijing have halted the production processes drastically. The renewed demand worries amid bulging restrictive measures in China are weighing on the copper prices.
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