Copper futures continue to trade around a 2-year high, with increasing demand from industrial exporters like Germany and China counterbalanced by sustained weakness in the economy as a whole. By midday, Globex Decmber copper futures had dropped 2.35 cents to 359.45 cents per pound, after earlier reaching as high as 364.4 cents per pound.
Last week, the red metal climbed steadily; on the London Metal Exchange, it came within spitting distance of the historic resistance level of $8,000 per ton. The last time it crossed that line was in April, but it quickly dropped off.
Like crude oil, copper is intrinsically linked to the ups and downs of the economy as a whole, and industrial production in particular. It also depends greatly on the fortunes of the housing market; in the U.S., a quarter of all copper consumption comes from construction activity.
"On the balance of these probabilities, then, we believe it is likely that copper will at best 'pause' for a while," Citigroup analysts said in a report covered by Bloomberg. The analysts projected that prices could fall by about a fifth before they "justifiably advance through old highs."
Risk Disclosure
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.