Copper Prices Decline -0.59% to 720.7, driven by a shift in market projections regarding the timing and magnitude of potential interest rate reduces by the United States (US) Federal Reserve (Fed).
The release of the minutes from the policy meeting in December dampened initial hopes that the Fed would start policy easing in March and raise copper prices as a major economic indicator.
The minutes showed that the majority of policymakers thought borrowing costs should stay high for a while, thereby indicating that a rate cut in March is less likely.
Supply constraints brought on by low stock levels in China, where demand remained strong, added to market anxieties. However, warehouses under the supervision of the Shanghai Futures Exchange saw a 7.2% increase in copper inventories from the previous week, which put downward pressure on prices.
According to the nation’s copper commission Cochilco, total copper output in Chile, a major copper-producing nation, decline by 2.34% on a yearly basis in November to 442,800 metric tonnes.
Slightly less than the 56,000 metric tonne shortfall in September. The ICSG reported a 53,000 metric tonne deficit in the global refined copper market for October.
Technically, there was new selling on the market, as open interest increased by 6.76% to 5800 and prices dropped by -4.25 rupees.
Support for copper is seen at 718.3, and a break below there could trigger a test of the levels at 715.8. Price action towards 729.6 could be trigger by a move above the expect resistance level of 725.2.