Copper Supported by the Fed’s Jumbo Cut

23 Sep

After May’s record peak, copper prices slumped as demand optimism went away due to US and China economic fears, EV adoption slowdown and AI euphoria giving way to skepticism. However, copper staged a rebound, as China has been stepping up its effort to prop the economy, while AI optimism returned recently lifting tech and chip-making sectors. Furthermore US recession fears were quelled after the Fed slashed rates by a jumbo 0.5% last week and pointed to aggressive easing ahead, in what could be a boon for the property sectors where copper is used heavily.

These forces have helped the non-ferrous metal regain control above the EMA200, providing the launch pad for reclaiming the 4.500 handle. This would bring the summer high in the spotlight (4.700), although this level has a higher degree of difficulty.

On the other hand, the Fed’s frontloading creates risk of renewed inflation pressures that could lead to a shallower easing path, while China economic problems persist and the real estate sector remains in distress. Copper starts the current week on the back foot, unable to capitalize on its recent bounce. This sustains risk of sub-EMA200 moves that would pause the momentum, but the downside contains many buffers and prolonged weakness does not look easy, technically nor fundamentally.


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