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Last Updated : Jan 13, 2020 08:32 PM IST | Source: Moneycontrol.com

Copper futures gains 0.17% on low inventory, more upside likely

According to Dharmesh Bhatia, Associate Vice President, FX and Commodities, Emirates NBD, Copper formed a golden cross, a technical pattern where an asset’s 50-day moving average tops its 200-day counterpart that can signal further gains.

Copper futures gained 0.17 percent to 448.40 per kg on the pick up in spot demand as the metal got a boost from the US-China deal on January 15 and fears of conflict in the Middle East diminished.

The base metal inventory at the LME-verified warehouse dipped to 142,900 tonnes, the lowest since in nine months to have supported the metal's prices. The threat of a long trade war limited mining activity and kept manufacturers from adding to their stocks. Inventories at warehouses tracked by the three international exchanges, a last resort for supply, have shrunk by about 37 percent since July to just shy of 300,000 tons, which is equivalent to just 1.2 percent of global consumption.

According to Dharmesh Bhatia, Associate Vice President, FX and Commodities, Emirates NBD, Copper formed a golden cross, a technical pattern where an asset’s 50-day moving average tops its 200-day counterpart that can signal further gains. The metal ended 2019 at the highest in more than seven months after China moved to stabilize its economy and on signs of thawing tensions between Beijing and Washington.

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The bullish momentum on copper came as smelters suffered depressed margins, and the metal benefits from its exposure to electric vehicles and renewable energy. Still, the technical bullishness faces headwinds after a US airstrike that killed a top Iranian general ratcheted up geopolitical tensions.

Copper has been displaying bullish price action on multiple time frames of late. This is mainly due to growing optimism that US and China will soon end their damaging trade war. The two sides are set to sign phase one of the deal in a few days’ time and then immediately start phase 2 talks afterward, said Bhatia.

In the futures market, copper touched an intraday high of Rs 448.90 per kg and an intraday low of Rs 447.05 per kg on MCX. For the January series,  copper touched a low of Rs 432.70 and a high of Rs 448.90 per kg.

On the Multi Commodity Exchange, copper delivery for January contracts gained Rs 1.30, or 0.29 percent, to Rs 448.70 per kg with a business turnover of 4,755 lots.

Delivery of the red metal for February jumped Rs 0.65, or 0.14 percent to 450.40 per kg with a business volume of 1,177 lots.

The value of the January contracts traded so far is Rs 574.07 crore, and that of February contracts saw a value of Rs 34.86 crore.

Emirates NBD advised its clients to buy MCX Copper at Rs 441 with a stop loss at Rs 426 and target of Rs 460-475.

The prices of the red metal have been supportive as data from China showed its manufacturing sector expansion in December, which reflected that the second-largest economy in the world is stabilising.

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First Published on Jan 13, 2020 08:32 pm
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