Copper's Volatile Day: Market Rattled By Supply Shifts And Technical Pressure

(MENAFN- The Rio Times) Copper prices showed sharp swings over the last 24 hours, as market data from the London Metal Exchange and CFD markets confirmed a turbulent session.

Prices surged early on June 5, reaching a high of $5.09 per pound, before falling steeply to $4.94 and stabilizing near $4.96 by the morning of June 6.

The LME cash settlement closed at $9,834 per metric ton, with inventories dropping to 138,000 tons, marking the lowest level in nearly a year. The day's volatility reflected a combination of shifting supply fundamentals and technical signals.

LME data showed that inventories continued their downward trend, underscoring persistent concerns over physical supply. At the same time, increased ore output from South America and rising copper inventories in the United States tempered bullish sentiment.

These supply-side shifts coincided with traders closing long positions ahead of key U.S. economic data, notably the Nonfarm Payrolls report, which often triggers broad market volatility.


Copper Market Technical & Macro Overview
Technical analysis of the four-hour copper chart revealed a market struggling for direction. The closing price of $4.96 sits above the 20, 50, and 200-period moving averages, as well as above the Ichimoku cloud.

These indicators suggest a short-term uptrend remains intact. However, the price remains below the 9-period moving average, reflecting a loss of momentum after the failed test of the $5.09 high.

The Relative Strength Index (RSI) stands at 25, indicating the market entered oversold territory during the sharp decline. The MACD shows a mild negative value, while the signal line remains flat, hinting at consolidation rather than a clear reversal.

Bollinger Bands show the last close near the middle of the range, with the upper band at $5.06 and the lower at $4.90, highlighting ongoing volatility and the potential for further swings.

In the broader context, macroeconomic factors weighed heavily on sentiment. The People's Bank of China cut key lending rates and increased bond issuance, attempting to support factory activity amid weak domestic data.

However, the influx of South American copper into the U.S. and the narrowing spread between U.S. and London prices pointed to ample supply in North America.

The Global X Copper Miners ETF (COPX) reflected the day's uncertainty, closing at $43.64 with moderate volume, after a steady climb earlier in the week.

The market's sharp reversal from the $5.09 peak resulted from a blend of profit-taking, technical resistance, and caution ahead of major U.S. economic releases.

While the underlying trend remains supported by low inventories and ongoing supply risks, the technical picture signals heightened volatility and a market searching for direction. Traders now watch for further economic data and supply developments to determine copper's next move.

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