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This is a follow up article to: Copper prices rise in the face of supply risks in Chilean mine
Copper prices (Symbol: Copper-C) climbed to $4.21 per pound, marking a crucial recovery and positioning the orange metal for its first monthly gain since May 2024, with a modest 0.5% increase so far in August 2024.
Picture: Copper prices edge higher on fed rate cut hopes, as observed on the VT Markets app.
The initial part of August 2024 saw copper prices tumble due to disappointing U.S. jobs data, which stoked fears of an impending recession and triggered a sell-off in global risk assets. However, subsequent economic reports have assuaged these concerns, leading to a recovery in copper prices.
The market is now looking forward to the potential for a U.S. interest rate cut in September 2024, which would likely boost industrial demand and provide further support to the metal.
Related article: Interest rate tug-of-war for central banks
U.S. economic data released on Thursday showed that the economy grew slightly faster than expected in the second quarter. While this has slightly reduced expectations for a more significant 50 basis-point rate cut by the Federal Reserve, traders are closely monitoring upcoming data releases for further indications.
Despite this positivity, demand concerns, particularly in China, have limited the gains. The country’s ongoing housing crisis continues to dampen overall demand, even as declining copper inventories have led to some buying.
The modest rise in copper prices is encouraging, particularly with the backdrop of potential Fed rate cuts, which could spur industrial demand. However, the tepid demand from China remains a significant headwind, especially with the ongoing housing crisis weighing on the market.
Traders should keep a close eye on upcoming U.S. economic data, as any surprises could shift expectations around the Fed’s policy moves and impact the way you trade copper.
Additionally, seasonal factors may play a role, with industrial activity typically picking up in September and October, potentially providing further support to copper.
