Copper And Platinum Recovery on the Prospect of Economic Reopening

The global economy suffered due to the outbreak of COVID-19. Copper prices plunged around 25% from January high at $2.87/lb to March low at $2.10/lb, while platinum prices slumped around 40% from $1,021/oz to March $588/oz.

Commodities 7

Both copper and platinum have industrial usage. Copper is the most popular metal for industrial usage, such as wire, motor, construction material and so on. Besides, copper is also named as an economic indicator as it is widely used in different areas. Platinum is used in the chemical industry as a catalyst and electronic industry for computer hard disks and thermocouples.

The global economy suffered due to the outbreak of COVID-19. Copper prices plunged around 25% from January high at $2.87/lb to March low at $2.10/lb, while platinum prices slumped around 40% from $1,021/oz to March $588/oz

After that copper and platinum prices rebounded 15% and 40% respectively on the prospect of economic reopening. Recently, the Japanese government was set to end its nationwide state of emergency. Meanwhile, Australian government allowed kids to go back to the classroom. Countries gradually eased the lockdown, while investors would expect the recovery of economic activities.

Commodity Futures Trading Commission reported that the net long position of platinum increased by 5,161 contracts to 11,797 contracts , reaching 10-week high, for the week ended. On the other hand, the net short position of copper decreased by 3,450 contracts to 9,702 contracts, reaching a 4-month low. In above data, we could see that the investors are still adding the bullish bet on platinum and cutting the bearish bet on copper. This indicates the positive signal for both metals, as the risk appetite of investors is increasing.

In addition, China's copper concentrate import increased 22.9% on month to 2.03M tons in April. China is the largest copper consumption country in the world, the increase of copper import could mean the recovery of the Chinese industrial activities..

Let's take a look at the copper's daily chart.

Source: GAIN Capital, TradingView

The technical outlook of the copper is positive as the prices are supported by a rising trend line drawn from March low. Besides, the prices have recorded a series of higher tops and higher bottoms. The golden cross between 20-day and 50-day moving averages has been identified. It helps to enhance the positive signal as well.

In this case, as long as the support level at $2.28/lb (the low of May 4) is not broken, the copper could consider a further advance to the resistance levels at $2.49/lb (the low of February) and $2.63/lb (the high of February). 

After that, it is time to take a look at the platinum chart.

Source: GAIN Capital, TradingView

On a daily chart, platinum validated a bullish breakout of the ascending triangle, suggesting the resumption of the recent uptrend. Recently, the 50-day moving average is also turning upward. As prices stand above both rising 20-day and 50-day moving average, the short term outlook would be positive. 

Bullish readers could set the support level at $750/oz (the overlap support level) and resistance levels at $905/oz (the high of March 6) and $950/oz (the low of February 3).

Build your confidence risk free

More from Commodities

Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.