Copper Rallies As Potential Mining Strikes Loom
Today’s Spotlight Market
Speculators have remained short the Copper market but may be in the process of curtailing their net-short positions. The most recent Commitment of Traders report shows that the combined net-short position of non-commercial and non-reportable trader?s totals over 37,000 contracts, which is rather sizable for this market. Commercial traders on the other hand have been adding to their net-long positions of late as end-users appear willing buyers at current price levels. ?
Fundamentals
Copper prices have rebounded off of 7-month lows as traders cover short-positions on fears of potential mine strikes in Peru and Indonesia. If both strikes take place, it would shut production at two of the world?s largest Copper mines responsible for nearly 70,000 metric tons of production per month, which would severely tighten the global supply of Copper concentrate. Copper prices have received an additional boost of late, as traders are starting to expect additional stimulus measures from many major global Central Banks and especially from the Peoples Bank of China (PBOC). China is the leading consumer of Copper, so any signs that Chinese government officials are implementing polices to improve domestic investment is deemed bullish for the red metal. Going forward, the next move for Copper prices may be influenced by the direction of the U.S. Dollar (USD). Recent Dollar strength has stalled somewhat, which has added some support to commodity prices. A stronger USD is normally deemed a bearish factor for commodities priced in USD as it makes the commodity more expensive for non-U.S. buyers.????? ?
Technical Notes? -? View Today’s Chart
Looking at the daily chart for December Copper, we notice the market forming what appears to be a ?V? shaped bottom formation. Prices have moved above the 20-day moving average and the 14-day RSI has started to strengthen, with a current reading of 56.49. One negative item to the sustainability of the recent price rally is that it is occurring on slightly lower trading volume. This could be a sign that short-covering is behind the move with new longs not yet being established in the market. 3.1090 is seen as the next major resistance level for December Copper, with support found at 2.9515.
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