LME copper prices back towards $4,500/tonne

Wednesday, February 10, 2016

LME three month copper prices had near term support kicked from underneath them yesterday as prices closed over 2% lower on the day, breaching near term support at the 50 day MA which we had anticipated to hold up well given Monday’s cautious session. Selling pressure dominated the day, testing appetite for prices back below $4,500/tonne, however, we managed to hold above this psychological level of support at the close. Activity early today suggests there may be more downside to come as we trade sub-$4,500 early on. News that Freeport-McMoRan is set to resume shipping from its Grasberg mine in Indonesia acted as a dampener on copper prices, despite further USD weakness as the ramping up of operations at world’s second largest mine by capacity will likely add to the supply glut.

The dollar index extended declines yesterday after some brief consolidation around the 200 day MA over the past few sessions, targeting a close just above 96.000. Intraday losses yesterday saw the greenback trade as low as 95.663, its lowest level since late-October last year as continued risk aversion saw investors rush for safety. We would have expected a weaker dollar to be broadly supportive of commodity prices, however, base metals headed broadly lower yesterday and front month crude futures posted sharp losses as an overriding bearish macro outlook dominated investor sentiment.

Gold prices look to have hit a ceiling with prices struggling to lift much higher yesterday, end the session around $1,190/oz with activity early this morning stabilising around these levels. Risk aversion can only push the precious metal so far and intraday moves on the upside on both Monday and Tuesday failed to gain a foothold above $1,200/oz. We’ll be watching today’s session closely, attempts overnight towards $,1195/oz were short lived and we could see the tide starting to turn as investor take a pause and reassess the impulsiveness of recent moves higher.  

LME copper prices under pressure once again

LMCADS03 Comdty LME COPPER 3 2016 02 10 07 59 51

Spot gold prices struggling to post further gains

XAU Curncy Gold Spot Oz D 2016 02 10 08 38 13

Events for today

CN Market Holiday 

0930

UK

Dec

Industrial Production

0930

UK

Dec

Manufacturing Production

1500

UK

Jan

NIESR GDP Estimate

1900

US

Jan

Fed Monthly Budget Statement

Topics: Copper, Gold, DXY, LME
More from: Kash Kamal