Copper prices have soared as expectations of improving growth and robust demand boosted sentiment which triggered a buying spree, pushing prices through key resistance levels and creating further upside momentum.
Global prices of the metal, used majorly in the power and construction industries, have been up about 50 percent since the middle of March when the global economic activity was stalled as a result of the Covid-19 lockdowns.
Investors and traders stated that a break above the 50-day moving average had sparked short position covering causing copper to jump to a session high from $6,580 to $6,710 per metric tonne, but there are indications the price will fall as countries undergo economic recoveries.
Jens Pederson, an analyst from Danske Bank, Denmark is optimistic the global economy will recover over the coming year and that would play a great role in stabilising the price. He further stated that the recovery of the Chinese economy is good news for the metal as it shows that the Chinese economy is on a recovery path.
“Asia and China are doing well, which is important for metals. The direction is up, but it won’t be a straight line.” he added.
China’s factory activity has recorded extended growth in September as the world’s largest consumer of refined copper revved up its overseas demand. China also accounts for about half of global consumption of industrial metals.