Copper continues to be important to the AI story, and the markets are currently trying to determine if we can stay above the crucial $6.50 level.
Copper
The copper market has gone back and forth during the course of the trading session on Tuesday, as we continue to see the $6.50 level offer a significant amount of support. The $6.50 level is an area that I think will probably extend down to the $6.40 level, and therefore this is a situation where there are plenty of buyers.
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If we can break above the top of the candlestick for the last couple of sessions, it could open up the possibility of a move to the $6.80 level. The $6.80 level is an area that was a swing high that we had seen about 2 weeks ago. If we can break above there, then it opens up the possibility of a move to the $6.90 level. I do believe that the $7 level is a big psychological barrier at this point.
Still a one-way trade for me.
I do not wish to short copper. Keep in mind that mining operations and a big labor strike in Chile continue to be a problem for copper as well. While we have a massive amount of demand out there for AI centers and the electrification of the overall economy, ultimately I do believe that this is a buy-the-dip market, and I do think short-term traders are willing to go and pick up any little bit of value that we can.
Copper is, I believe, a longer-term bullish market, and the bullish market, of course, has been in effect for some time. As AI data centers continue to be a major driver of the economic scenario around the world, that should continue to lift copper. That being said, higher financing rates at the moment are a major problem. If we can get yields to drop, that would more likely than not be the fuel that this metal needs.
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