Copper price analysis: Here’s what to expect in the short term and beyond

Bulls remain in control of copper price as analysts expect demand to outpace supply into the coming year. However, the persistent economic uncertainties are curbing its upside potential, at least for the short term. At the same time, the rebounding of the US dollar is exerting pressure on the dollar-priced asset. In the ensuing sessions, the focus will be on the release of the US jobs data and the overall market sentiment.

Range-bound trading persists ahead of US jobs data

Copper price has rebounded by close to 15% since its plunge in late July. Supply concerns and a robust demand outlook have created an imbalance that is set to sustain its uptrend into the coming year. 

Nonetheless, the persistent economic uncertainties are curbing its upside movements, at least in the short term. Considered a barometer for the health of the global economy, Dr. copper tends to move in tandem with the economic growth. 

Recent data from the leading importer and consumer of the red metal, China, showed a decline in investment and industrial output. Investors are now eyeing the US jobs report for September and other crucial figures delayed due to the 43-day government shutdown. Signs of a slowing labor market will likely be bearish for copper price as it impacts the short-term demand outlook.

At the same time, recent US dollar gains are weighing on the dollar-priced asset. On Wednesday, the dollar index, which tracks the performance of the greenback against a basket of six major currencies, was at a two-week high. During that timeframe, it had been trading below the crucial zone of $100 as investors bet on further interest rate cuts ahead of the Fed’s December meeting. 

The expectations have since shifted to a more hawkish Fed. This is based on the argument that the US central bank will have an incomplete picture of the country’s inflation and labor market in its next meeting. 

A stronger US dollar tends to weigh on copper price by rendering the commodity more expensive for buyers holding foreign currencies. However, the persistent concerns over the health of the US and global economies are set to curb the greenback’s upside potential while supporting Dr. Copper. 

Comex copper price technical analysis

Copper price remained range-bound despite the gains recorded on Wednesday. Notably, the asset has held steady above $4.90 since rebounding past it in late September. 

In recent sessions, it has been trading in an even narrower range of between 44.90 and $5.07. A look at its daily chart indicates that the span matches the lower and middle Bollinger bands. 

At its current RSI of 50, it may continue trading sideways as the bulls attract enough buyers to rally further. However, in the short term, a rebound past the highlighted range will likely activate the upper resistance level of $5.24.