Copper Dropped Due To Revised Expectations Of The Fed’s Interest Rate Cuts

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  • Commodities News
Copper Dropped Due To Revised Expectations Of The Fed’s Interest Rate Cuts
Credit: © Reuters.

Copper experienced a decline of -0.59%, settling at 720.7, influenced by a shift in market expectations regarding the timing and scale of potential interest rate cuts by the U.S. Federal Reserve. Initial optimism that the Fed would initiate policy easing in March, boosting copper prices as a key economic indicator, was tempered after the release of minutes from December's policy meeting. The minutes revealed that most policymakers believed that borrowing costs should remain elevated for an extended period, suggesting a March rate cut is less likely. 

Adding to market concerns were supply tensions driven by low stocks in China, where demand continued to be robust. However, copper inventories in Shanghai Futures Exchange-monitored warehouses saw a 7.2% increase from the previous week, contributing to downward pressure on prices. In Chile, a significant copper-producing country, total copper production fell by 2.34% on an annual basis in November, reaching 442,800 metric tons, according to the country's copper commission Cochilco. The ICSG reported a 53,000 metric ton deficit in the global refined copper market for October, slightly lower than the 56,000 metric ton deficit in September. 

Technically, the market witnessed fresh selling, with a notable 6.76% increase in open interest to 5800, coupled with a price decrease of -4.25 rupees. Copper is finding support at 718.3, and a breach below may lead to a test of 715.8 levels. Resistance is anticipated at 725.2, and a move above could propel prices toward 729.6.

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