Copper price forecast: on the cusp of a 10% jump

By:
on Apr 18, 2023
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  • Copper price has moved sideways in the past few days.
  • China published strong first-quarter GDP data on Tuesday.
  • Analysts expect copper’s supply deficit to widen in the next few years.

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Copper price drifted sideways on Tuesday even after the impressive China GDP data. It was trading at $4.07, which was ~2.57% below the highest level on Monday this week. In all, copper has jumped by over 30% from its lowest point in 2022.

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China GDP data

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Copper price has been in a tight range in the past few days even as odds of a supply deficit remains. Most importantly, the metal consolidated even after the latest China GDP data. As I wrote in this article, the Chinese economy is doing remarkably well as it moves past Covid.

The data revealed that the economy expanded by 4.5% in the first quarter, helped by strong exports and infrastructure spending. This growth was also helped by a rebound in property prices after they plunged following Evergrande’s implosion. Data published on Monday revealed that house prices soared at the fastest pace in 21 months in March.

Most importantly for copper, industrial production also expanded sharply in the first quarter. Copper is widely used in many industries. And in most cases, copper is usually seen as a barometer for the world economy. 

China’s recovery bodes well for copper, a metal that is widely used in most industries like automobile, construction, and overall infrastructure. \

Meanwhile, despite recession risks, other countries in the US and Europe are doing well. In the US, manufacturing activity is doing well as companies move manufacturing closer to home. Many European companies have announced that they will move to the US because of the Inflation Reduction Act.

Most analysts believe that copper demand will continue rising in the coming years. At the same time, supply will be limited, which will lead to a huge surplus in the coming years. As we saw with palladium, supply deficits tend to push prices higher.

Copper price forecast

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Copper chart by TradingView

The daily chart shows that copper prices have moved sideways in the past few days. It is now trading at the 50% Fibonacci Retracement level. Also, copper is oscillating at the 50-day and 25-day exponential moving averages.

Most importantly, copper has formed a symmetrical triangle pattern that is shown in red. Now, with this triangle approaching its confluence level, there is a likelihood that it will have a bullish breakout soon. If this happens, the next key level to watch will be at $4.50, which is 10% above the current level.

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Copper Commodity