Copper price analysis beyond the consolidation phase: Will it rebound or fall?

Comex copper price edged higher on Tuesday but stayed range-bound. As a barometer for the global economic health, its recent price movements mirror the persistent economic uncertainties in the financial markets. Indeed, fear remains the key emotion driving the markets at an extreme fear level of 13. 

Nonetheless, supply tightness and expectations of a rate cut during the Fed’s December meeting continue to support prices. In fact, these bullish drivers offer the bulls a chance to fuel a breakout to retest October’s high.

Demand/supply imbalance sets stage for copper price

Copper price has found support in rising bets that the Federal Reserve will cut interest rates during its December meeting. While the central bank’s officials hold differing opinions, signs of a slowing labor market and elevated inflation are fueling the expectations of a dovish Fed. 

The optimism has been particularly bolstered by Federal Reserve Governor Christopher Waller, who has stated that the US job market is slow enough to warrant a 25 basis point rate cut in December. However, he was quick to add that the appropriate action beyond that depends on the upcoming data. Notably, an environment of lower interest rates tends to benefit copper and other industrial metals.

At the same time, supply tightness continues to offer steady support to the red metal. From the wave of disruptions in major mines to China’s expansion of its processing capacity, a supply deficit is expected as soon as the current year. In fact, the 3-month spread skyrocketed to a 5-week high at over $20 per metric ton. This is an indication that buyers are parting with more cash for immediate supplies.  

The brewing supply/demand imbalance sets the stage for higher copper prices into the coming year. In its updated forecast, UBS now expects copper price to reach $11,500 per metric ton by March 2026; an increase from its previous projections of $750. It has also made upward adjustments to its June and September targets to $12,000 and $12,000 respectively. 

By December 2026, it expects copper price to hit $13,000 per metric ton. In 2025, its forecast is for a supply deficit of 230,000 tons with production and demand growth estimated at 1.2% and 2.8% respectively. The bank sights tight supply and a strong long-term demand outlook as the key drivers of this bullish market.

Copper price technical analysis

Comex copper price momentarily rose above the resistance zone of $5.0750 on Tuesday before pulling back to the range that has defined its movements for over a week now. A look at its daily chart shows the price hovering along the crucial zone of $5.00, which matches the short-term 25-day EMA.

Notably, the Comex price has formed a symmetrical triangle pattern, which signals consolidation in the near term. In the immediate term, the red metal may trade within a tight range of between $4.95 and $5.10. 

However, the bulls still have a chance to foster a breakout to retest October’s high at $5.24. This thesis remains bullish for as long as the red metal continues to trade above the over one-month support level of $4.90.