Copper price has been range-bound after an uptrend that lasted for close to a year. Between March 2020 and February 2021, the red metal had surged by over 54%. However, it pulled back to a low of about 3.85 in early March and has been trading sideways ever since. On the one hand, the slowdown in China’s purchasing has curbed the red metal’s gains. However, those looking to trade precious metals are hopeful that President Biden’s $2 trillion infrastructure package will support copper price.
Slowdown in China’s Purchasing
China’s buying spree has largely been behind the prolonged rallying of copper price. In 2020, the Middle Kingdom pumped $500 billion into its economy to facilitate its recovery from the pandemic. This resulted in a surge in imports for various commodities including crude oil, copper, and agricultural produce. China’s copper imports surged by 34% YoY to 6.7 million tonnes. However, the China has recently eased on its investment-led approach as a means to lessen its bad debt.
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Copper price has also been influenced by President Biden’s proposed infrastructure plan. While the red metal is likely to benefit from the package, the market is reacting sparingly as it waits to see if policymakers will approve it. From this perspective, the expected rise in the metal’s demand may already have been factored in at the current price level.
Copper Price Technical Outlook
On a daily chart, copper price is trading slightly above the 20 and 50-day exponential moving averages. Since the beginning of March, the red metal has been range-bound between 3.85 and 4.22. On Monday, it was up by 3.32% at $4.12. With the rectangle pattern, the outlook is rather neutral. The price is likely to find resistance around 4.25 for a couple of sessions before the bulls manage to push it into a breakout on the upside.
If that is successful, the target will be February’s high of 4.37, and the upper level of 4.67. The two targets are the metal’s highest price since August and February 2011 respectively. On the flip side, a move below the current support level of 3.85 will have the bears testing the psychological 3.75. That will be its lowest level since February 2021.
