Copper Slides As AI Fears Return
.png)
AI Weakness
Copper prices have come under pressure today as AI sentiment weakened once more on the back of disappointing earnings from Alphabet and Samsung this week. The tech giants added to the recent run of underperformance we’ve seen following misses from Tesla and Meta also. With the AI business in question, demand expectations have been knocked lower. Given copper’s usage in chipmaking, battery development and also data centers and other infrastructure, any change in outlook for the AI sector has key implications for copper prices as we’re seeing today.
Strong China Demand
Still, demand from China remains a key supporting factor with the Yangshan copper premium seen hitting its highest level in over a decade yesterday at $205 per ton. The Shanghai Futures Exchange has now suspended bonded delivery for refined copper in a further sign of the supply tightness which is impacting the metals trade in China. While Chinese demand remains at such elevated levels, the market should be able to withstand the current investor wobble around the AI sector. Of course, is this issue gain greater traction and we start to see a more defined move lower in tech prices, this could start to pull copper prices lower, especially when combined with expectations for a further Fed rate hike to come by year end.
Technical Views
Copper
The rally in copper has stalled for now into the 6.7190 level with price now reversing lower again. While this resistance holds, further ranging action is likely between that marker and support at the 6.3750 level. While that support holds though, the broader focus remains on further upside and a fresh breakout higher eventually.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% and 74% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.