The commodity markets gained the most this year, with hard metals and soft assets delivering double-digit gains. Hard metals like silver, gold, and copper hit new highs, while soft assets like the US dollar and consumables like oranges and eggs surged.
However, the general rule of the market is that what goes up must come down, as no asset class escapes correction. Copper prices now face corrections after the metal skyrocketed to $10,500 this year.
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The drop in copper prices comes after weak economic data, particularly from China, the global manufacturing hub. China has heightened concerns about the reduced demand for copper in the industrial sector, and manufacturing activity has fallen to its sex-month low, dampening the prospects of copper.
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Commodity Markets: Copper Prices Head South
Copper prices slipped below the $9,000 mark on Thursday and are currently trading at $8,830. As the metal attracts bearish sentiments, further downside is anticipated. A downward trajectory from here could send copper prices toward the $8,500 to $8,300 mark.
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Leading investor Ajay Kedia warned that copper prices could dip further in the charts due to lesser demand for the metal. He advised investors to avoid taking entry positions and wait until it bottoms out. A quick recovery for the metal is off the cards as it could fall into a prolonged downturn.
“China’s ongoing property sector crisis is dampening copper demand. The strengthening of the US dollar, which reached a two-week high, has exerted additional downward pressure on copper prices. Copper inventories have increased at LME-monitored warehouses, adding to market pressure. Copper is trading below its 200-day moving average, indicating further downside risk. Market sentiment remains cautious due to weak global demand and strong dollar influence,” said Ajay Kedia, Director of Kedia Advisory.
