Copper prices are trading at $3.50, a decline from last week’s $3.54. Last week’s peak price was the highest level since early 2013. Today’s drop is due to the overbought signal. However, the metal is finding support from China’s strong economic data.
Copper prices wavering around the overbought territory
Copper prices ended last week at a 7-year high. On Friday, it was trading at ~$3.54, which is its highest price level since March 2013. As at 07.03 GMT, the price of the red metal had dropped by 0.69% to trade at $3.50.
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The price of copper is wavering close to the overbought territory; an aspect that is of interest to investors looking to invest in commodities. With an RSI of about 75, investors are taking profit.
China’s strong economic data offers support to copper prices
Although copper is trading in the red today, its price is still above the $3.50 mark. The metal is finding support from the bullish numbers from China.
China consumes about 51% of all the copper produced globally. As such, the country’s economic growth and consumption of the red metal are key measures when analysing the trend of copper prices.
The Middle Kingdom has recorded noteworthy economic recovery from COVID-19. On 30th November, data from the China Logistics Information Center indicated that the country’s manufacturing sector is booming. Its manufacturing PMI was 52.1. The reading was higher than experts’ predictions of 51.5. In the preceding month, the manufacturing PMI was 51.4.
A day later, Markit’s figures confirmed the trend. The Caixin manufacturing PMI were at 54.9, which is higher than the forecasted 53.5 and the previous month’s 53.6.
Today’s data on China’s exports and imports is yet another indicator of the country’s stable economy. November’s exports rose by 21.1% YoY compared to October’s 11.4%. Experts had predicted a growth of 12%. On the other hand, imports rose by 4.5% YoY. The figure is lower than October’ 4.7% and the forecasted growth of 6.1%.
Besides, the trade balance rose to $75.42 billion. In October, the figure stood at $58.44 billion. Analysts had predicted that the number would reduce to $53.50 billion in November.
The strong economic data from China have offered support to copper prices. Investors are banking on the country’s 5-year plan for increased demand for copper. China is striving to be a powerhouse for technology-based innovations. With copper being a crucial metal in electrical, machine industry, and construction sectors, the realization of this plan is set to increase the nation’s consumption of copper.
Copper prices are also finding support in the market sentiment on China’s commitment to advance its green infrastructure. The Chinese government is striving to reach peak emissions by 2030 and attain carbon neutrality before 2060. Analysts expect the growth of the nation’s green economy to boost the demand for copper.