Copper price analysis: A battle of the current reality vs future prospects

COMEX copper price is trading sideways even as the bulls remain in control. In fact, it hit a fresh 10-week high on Wednesday before pulling back slightly. After sliding out of the overbought territory, it still has ample room for a correction before the bulls gather enough momentum to bolster prices higher.

While the long-term outlook remains bullish, copper price gains may be curbed by slowing demand in the short term. Investors are eyeing the upcoming economic data from the two leading economies for clues on the health of the global economy and subsequent outlook of Dr. Copper. 

Before Dr. Copper’s bright future is a blurry today

Bulls in the copper market have been betting on the ongoing supply disruptions and the medium-to-long-term demand outlook for a steady uptrend. Indeed, these factors continue to support the red metal; fueling an over 20% increase year-to-date.  

From unrests in mines to declining ore grades and low investments in fresh mining projects, supply disruptions have largely impacted copper price movements in recent months. 

In the latest major incident, the second-largest copper mine in the world, the Grasberg mine in Indonesia, had its operations halted in early September after a deadly mud flow. It will likely remain below its pre-incidence levels till around 2027; further weighing on copper’s global supply outlook.

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In addition to the supply disruptions, the long-term demand outlook remains bullish on the pillars of urbanization, digitalization, and decarbonization. These factors are set to maintain COMEX copper price under the bulls’ control. However, future prospects do not necessarily equate to a bright reality. 

As a barometer of the global economy, Dr. Copper is under pressure from the persistent economic uncertainties. For instance, China accounts for close to half of the copper consumed globally. With this, the economic slowdown observed in the second-largest economy has capped copper price gains in recent months. In fact, tariff-related woes are what fueled the double-digit plunge in late July. 

Notably, China’s property crisis, sluggish domestic demand, and slow industrial production continue to weigh on the red metal. After the current week of festivities, China is set to release its trade balance figures next week. The two leading economies will also publish their CPI data, which is set to impact copper price movements.  

COMEX copper price technical analysis

On Wednesday, COMEX futures continued with sideways trading for the third consecutive day. After the over 25% plunge recorded in late July, copper price has rebounded by about 17%. Indeed, it has held steady above the psychologically crucial zone of $5.00 since the start of the week. At the time of writing, it was trading at $5.09 after easing from the 10-week high it hit earlier in the day at $5.15. 

The bulls will likely remain in control, a thesis supported by the bullish golden cross pattern formed late last week when the short-term 25-day EMA crossed the medium-term 50-day EMA to the upside. However, copper price gains may be curbed at the resistance level of $5.24 as the asset eases from the overbought territory. 

With an RSI of 69, the red metal has more room to cool. As such, the range between the resistance level of $5.24 and the crucial support at $5.00 will be worth watching in the ensuing sessions. A further pullback will activate the lower level of $4.93, below which this bullish thesis will be invalidated.    

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