The price of copper hit a new all-time high this week, as precious metals continue to surge as commodity prices explode higher due to well-founded inflationary fears from traders and investors.
Copper is well on its way to going parabolic as veracious demand for the red metal from China shows few of stopping amidst fears of a supply shortage in Peru, which is the world’s second largest copper producer.
Peru is a major focus right for metal traders, even as the narrative that copper is rising due to inflation fears and demand from China. Political changes are afoot in Peru, which could affect copper supply.
Presidential front-runner Pedro Castillo, the surprise socialist favourite for the June Presidential run-off has raised fears about a further supply shock in copper after suggesting that the mining industry could be nationalized.
Many commodity analysts are worried that nationalization could raise the risks of mining investment in Peru plunging, as it could suffer from foreign companies fleeing the country, which would place further upward price pressure on the red metal.
The logic is that higher risk means less overseas investment, which makes sense on many levels. For the record, Peru is also the world’s second largest producer of silver and zinc, and sixth largest gold producer.
Looking at sentiment metrics, the average mood towards copper is hinting that further gains are possible. No extreme bullish sentiment bias has formed, with just 53 percent of traders positive towards the price of copper, leaving further scope for upside price advancement.
Copper Short-term Technical Analysis
The four-hour time frame shows that a bullish breakout from an extremely large symmetrical triangle pattern is underway, following the recent move above the $437.00 level last month.
According to the overall size of this typically bullish price pattern copper could rally towards the $500.00 benchmark level, meaning that copper is close to its first bullish target.
The former yearly high, around $437.00 is now former key resistance turned key support for copper price in the short-term. The $430.00 level offer further support just below.
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Copper Medium-term Technical Analysis
The larger picture for copper prices continues to show a massive inverted head and shoulders pattern on the weekly time frame, which remains triggered while the price trades above the $400.00 level.
According to the overall size of the bullish reversal pattern, copper prices could rise towards the $700.00 level over the medium to long-term.
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