Copper futures are trading with a cautious tone this week, extending the volatility seen in the previous session. The red metal snapped a five-week winning streak last week, and market participants are now looking to a batch of US economic data and central bank commentary for direction.
Mixed signals keep copper in a holding pattern
On the supportive side, supply disruptions in major producing nations like Chile continue to underpin the long-term bullish narrative. Strong export demand and a surge in US imports—over 200,000 tonnes in July, the highest monthly figure in 12 years—have also added to the positive outlook. That import wave has pushed total US copper stockpiles, including Comex inventories and other storage, above 1 million tonnes, largely on expectations that the Trump administration might impose tariffs on refined copper imports.
However, the White House has yet to act on that front, and the deadline for the Commerce Department's recommendation passed in June. Meanwhile, rising inventories in Europe, the UK, and China have eased some near-term supply tightness. Last week, on-warrant copper stocks jumped by 63,000 tonnes across Europe, the US, and Asia—a surge of more than 50%. LME warehouses saw a 28,000-tonne increase, and Shanghai Futures Exchange-linked stockpiles rose by nearly 30%.
This inventory build highlights how quickly a price rally can draw metal back to exchange warehouses. While the immediate squeeze has faded, traders will keep a close eye on LME and SHFE stock levels for clues on future price action.
US data and Fed speech in focus
The market's attention now turns to the July PCE price index, the Fed's preferred inflation gauge, due later this week. A hotter-than-expected reading could reinforce expectations of another rate hike, while a cooler number might support the case for a pause. Fed Chair Jerome Powell's speech at Jackson Hole will also be scrutinized for any hints on the central bank's next move.
The US dollar, which bounced off a three-month low on Monday, is another key driver. A softer dollar tends to support copper and other dollar-denominated commodities. As a traditional economic bellwether, copper remains sensitive to global growth signals, including ongoing geopolitical tensions in the Middle East and the persistent weakness in China's property sector.
Technical outlook: consolidation likely
On the Comex, copper futures edged lower early Monday, continuing the choppy trade of the past week. After hitting a high of $6.75 per pound last week, the metal has held above both the 25-day and 50-day exponential moving averages (EMAs) on the daily chart. The longer-term bullish trendline remains intact, but with the Relative Strength Index (RSI) at 55, the near-term bias appears neutral.
Immediate support is seen near the 25-day EMA at $6.50, with a stronger floor at the 50-day EMA around $6.43. On the upside, resistance is noted at $6.65, followed by $6.71. A break above that level could open the door to further gains, while a drop below the trendline might trigger a deeper pullback.
Given the mixed fundamental backdrop and the upcoming macro events, copper prices are likely to remain range-bound in the short term. Investors should monitor the PCE data, Fed commentary, and inventory trends for the next directional catalyst.
This article is for informational purposes only and does not constitute financial advice.
