Copper price forecast: What next as the consolidation continues

Copper price remains under selling pressure as the US-Iran peace deal remains elusive. The recent strikes in the Gulf region have watered down the optimism that bolstered the economic bellwether to a fresh all-time high two weeks ago. Even with a solid long-term outlook, inflation concerns and a stronger US dollar are weighing on the red metal.

Fresh attacks weigh on Dr. Copper

Copper and other industrial metals have been trading within a range in recent weeks as investors weigh on the US-Iran peace talks. Copper, which is considered an economic bellwether for its vast electrical and industrial uses, has been trading below the resistance zone of $6.50 for two weeks now. It has lacked enough bullish momentum to break past that zone as investors maintain a wait-and-see mood over the geopolitical conflicts in the Middle East.

At the same time, platinum and silver prices have been under selling pressure, with the industrial metals both dropping to a four-week low on Thursday. 

On the one hand, a pullback in crude oil prices has eased inflation concerns as investors anticipate progress in the US-Iran peace negotiations. However, recent strikes have watered down the optimism. 

On Thursday, Iran launched a missile attack targeting a US military base in Kuwait. The attack, which was intercepted by Kuwaiti forces, was in retaliation to the recent US strike that Trump termed as being “purely defensive”. The Islamic Republic of Iran accuses Washington of constantly violating the ceasefire agreement. 

The fresh conflicts have bolstered the US dollar while rendering copper more expensive for buyers holding foreign currencies. The greenback rallied to a 7-week high earlier in the day before pulling back slightly. Similarly, the benchmark 10-year Treasury yields rebounded from the two-week low recorded in the previous session to trade at a one-week high. Even with the solid long-term demand outlook, the geopolitical uncertainties are set to continue swaying copper prices in the short term. 

Comex copper price technical analysis

Copper price chart | Source: TradingView

Earlier on Thursday, copper price extended losses from the previous session; reversing the gains made in a span of one week. Earlier in the week, the red metal rebounded to its highest level in over a week at $6.49. The selling pressure has since reversed those gains to an intraday low of $6.25, which coincides with the support level along the 25-day EMA. At the time of writing, it has recovered slightly to trade at $6.33.

A look at its daily chart points to high volatility in the short term. On the one hand, it continues to trade above the short-term 25-day EMA and the medium-term 50-day EMA. Besides, it has remained within the bullish channel that has shaped its price movements for close to a year now. 

With a steady long-term demand outlook, steady support is expected. However, its gains may be curbed by the ongoing uncertainties over a US-Iran peace deal. Its RSI of 55 further points to range-bound trading. 

Based on these technical indicators, the support along the 25-day EMA at $6.23 is still worth watching. With the expected consolidation, copper price will likely face resistance at $6.50. A rebound past that range may have the gains curbed along the bullish trendline, placing the next resistance level at $6.55. 

This cautiously bullish thesis will remain valid for as long as the red metal continues to trade within the bullish channel. This means that the 50-day EMA will continue to offer steady support despite the heightened volatility. A decline below $6.15 will invalidate this thesis.