Copper July futures closed down 965 points 367.70 cents Tuesday. Prices closed nearer the session low and hit a fresh two-week low as bulls quickly faded. It was a “risk off” trading day Tuesday and the key outside markets were in a bearish posture for copper as the U.S.$ index was firmer and crude oil prices were lower.
Copper prices have a strong technical support in the $361 to $347.50 range on the downside & should ideally bounce up from this level. Any breach with a sustained momentum below this level may signal a strong bearish trend.
Base metals followed the overall commodities complex and equity markets lower as the U.S. dollar strengthened, with demand projections worsening as Europe slips back into uncertainty. Aluminum, nickel, zinc and lead also closed lower. Conviction in the copper trading market has been blurred largely by China-centric factors, says Barclays Capital. “On the one hand, current physical market weakness in China, and potential implications for easing tightness in the rest-of-the-world market, offer the case for near-term bearish positioning,” the bank says. “However, on the other hand, the expectation for a strong rebound in the Chinese economy in the second half of this year, combined with ongoing under-performance on the mine supply side, supports the case for a retightening in fundamentals in H2 and a more bullish backdrop for Copper price performance.”
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