Copper
While gold has been shackled by the conflict in the Middle East and a hawkish shift in US rates, Dr Copper has been busy carving out a very different path.
Copper futures finished 2.56% higher overnight at $6.58 (+1.45%), not far from its recent $6.7160 record high, bolstered by another session of resilient US economic data.
The spark for copper’s overnight gains was the May ISM manufacturing purchasing managers’ index (PMI). The headline index jumped to 54, from 52.7 the previous month, its fastest pace in four years. Crucially for copper, the new orders component showed renewed strength, lifting to 56.8 from 54.1, indicating that demand for raw materials is accelerating.
In the world of base metals, ‘good news is good news’. While robust data traditionally pressures gold via higher yields and a stronger dollar, it emboldens copper bulls, who view it as a green light for future industrial consumption and broader global economic health.
Beyond the data, copper continues to be supported by a ‘perfect storm’ of structural drivers, which has contributed to its 15% gain this year. Supply remains precarious following ongoing disruptions at major mines in South America and a persistent lack of new ‘tier‑one’ projects.
Layered on top of this is the drive for artificial intelligence (AI) dominance. The massive expansion of data centres required to support AI infrastructure is incredibly copper‑intensive, creating a new, non‑cyclical pillar of demand that is fundamentally tightening the market.
Copper technical analysis
The technical picture for copper remains decidedly more bullish than that of its precious metal cousin. After a false start midway through last year, copper has convincingly broken higher this year, carving out a series of higher highs and higher lows, with the most recent rally taking copper to a record high of $6.7160.
After a sharp 8.4% pullback from that peak, the metal has found solid buying interest in the $6.15/$6.12 horizontal support band and is now attempting to push back towards recent highs.
As long as price holds above the $6.15 – $6.12 support band (on a sustained basis), the uptrend remains firmly in place and a retest and break of the $6.7160 record high is likely before a push towards $7.00.
A sustained break below support at $6.15 – $6.12 would warn of a deeper pullback towards $5.90 – $5.80.