Copper bounces off weak dollar

The 200-day moving average continues to cap gains in the base metal, as the uncertainty arising from the ongoing debt ceiling keeps any real rebound at bay.

News that China, which consumes 40% of the world’s copper, is coming out of its reverie, and that destocking of inventories there is coming to an end, should help support prices.

Copper prices have been held back in recent weeks by uncertainty surrounding US fiscal and monetary policy, as well as by long-standing worries that the market is well supplied elsewhere and moving into surplus.

Having reached a one-week high in the last session, the support appears to be holding firm around the $3.23/lb mark. A break through $3.35 may only come if we see a more profound weakness in an already fragile dollar.

Copper chart

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