Copper prices fell -0.17% to settle at 729.85, primarily due to a stronger dollar.
The strengthening of the US dollar exacerbated pressure on copper prices as traders factored in the possibility of a Federal Reserve rate cut in the upcoming year.
The currency used to price copper benchmarks is strengthened by a stronger dollar, leading to diminished purchasing power for importers and causing copper prices to fall. Copper stockpiles in Shanghai’s monitored warehouses decreased significantly.
Falling nearly 90% to 30,905 tonnes since late February, despite the overall decline. Similarly, since mid-March, copper stocks in Shanghai’s bonded warehouses have dropped 96% to 6,500 tonnes.
A decline in inventory usually indicates strong supply chain or demand constraints, which help to moderately support the market. The three-month contract’s discount to cash copper, which is trading close to 31-year lows. Indicates concerns about the outlook for demand.
A precipitous fall in the official Chinese manufacturing PMI raised concerns about demand. Even though broader Caixin data showed improved expansion. Trading professionals should keep a close eye on changes in the US dollar, Chinese economic data, and patterns in copper demand around the world.
Technically, there is new selling pressure on the market, and 727.2 is the support level. If this level is broken, it might test 724.6; if it breaks above. It might test 736.8, but resistance is probably at 733.3.