The price of copper is up 3% as dealers buy back into the red metal, feeling it has been oversold.
Despite being up 3% on the day, copper is still down 10% since the beginning of March as traders are picking up the commodity for a relatively cheap price. Investors are concerned about global growth and, in turn, the demand for the metal, so they have been selling copper readily in recent weeks. Financial markets don’t usually move in a straight line, so from time-to-time you might see a correction in the price – some analysts subsequently feel the upward move in the price will be short-lived.
Not only are we seeing bargain-hunting we are also seeing some short-covering, which is when a client who sold copper in the past has to buy it back to close out their position. This action can push the price higher, even though it is in a down-trend.
Tomorrow, the US will release their latest gross domestic (GDP) figures; copper is essential for the manufacturing and construction sector, so if US GDP drops, we might see dealers sell copper.