Copper’s up trend resumed last week and accelerated significantly higher. The move was primarily driven by imposition of new trade sanctions by the UK and US, targeting Russian exports of key metals including aluminium, copper, and nickel to major commodity exchanges like LME and CME. This policy move, aimed at penalizing Russia for its actions in Ukraine, has effectively curtailed supplies of these metals, exerting upward pressure on prices.
The underlying fundamentals of Copper have also been robust, shaped by a combination of supply-side challenges and a upturn in the global economy. Notably, rebound in China’s industrial activity has played a crucial role in bolstering market momentum. Additionally, disruptions at significant mining operations have tightened the supply further, adding to Copper’s momentum.
From a speculative standpoint, the enthusiasm in the copper market is also palpable. According to recent LME data, hedge funds have increased their net long positions in Copper to the highest levels since February 2021. This influx of financial investments into copper futures suggests that prices may now be exceeding the actual market fundamentals, indicating a speculative bubble in formation.
Technically, the strong break of 4.3556 resistance confirmed resumption of whole rise from 3.1314 (2022 low). Near term outlook will stay bullish as long as 4.2645 support holds. Next target is 261.8% projection of 3.5021 to 3.9346 from 3.6324 at 4.7647.
This level is close to 100% projection of 3.1314 to 4.3556 from 3.5021 at 4.7263, as well as long term channel resistance. The cluster resistance zone at around 4.7 would be crucial to decide whether Copper is already in a secular bull markets that’s ready to power through 5.000 psychological level.
