- Copper prices reverse the previous day’s losses amid cautious optimism in the market.
- US dollar softens amid repeated Fedspeak suggesting 50 bps rate hike, softer data.
- China’s covid numbers ease, Shanghai announced a gradual opening of the economy.
- Inflation, growth fears put a cap on the metal prices.
Copper futures improve to $4.20 on COMEX as mildly upbeat market sentiment weighs on the US dollar. Also favoring the red metal are the recent positive headlines from China, mainly concerning the coronavirus.
Prices of the metal on the London Metal Exchange (LME) are also improveing but those on and Shanghai Futures Exchange (SFE) remain sluggish. That said, benchmark three-month copper on the LME gains 0.4% to $9,276 a tonne, after dropping 1.4% in the previous session, whereas the most-active June copper contract on SFE dropped 0.30% to 71,550 yuan ($10,586.04) a tone, per Reuters.
That said, commodity prices refreshed weekly lows the previous day but have printed 1.20% daily gains in the initial hour of Thursday’s European session.
The metal’s gains support from the hopes of back-to-normal activities in China, after multiple days of covid-led lockdown, mainly due to the recent easing in virus numbers. China reported a drop in the daily covid cases and death tolls to 1,082 and one respectively, versus 1,305 and three in that order on Thursday. Along similar lines are Shanghai’s plans to unlock the economy in a phased manner after covid-led restrictions.
Elsewhere, the US Dollar Index (DXY) drops 0.17% intraday to 113.65 as greenback bulls await fresh clues after being tired of hearing 50 bps rate hike calls from various Fed policymakers, including Chairman Jerome Powell, of late. Philadelphia Federal Reserve Bank President Patrick Harker was the latest one in the line.
It’s worth noting, however, that broad fears of inflation and growth remain on the table, which in turn weigh on the red metal prices of late.
To sum up, the commodity’s latest gains appear ephemeral but the USD pullback will please intraday buyers.
Copper futures on COMEX remain on a bearish trajectory whilst staying below the $4.50 level. However, the downside below $3.90 will make it vulnerable to testing early 2021 lows near $3.50.