Copper trading outlook: futures remain steady as US data is expected, Chinese demand grows

Copper kept the recent steady up-beat during the first half of Europes trading day, as investors eye a report on pending home sales in the US later today. Later in the week a number of indicators for the US will be released, with solid positive outlooks for the worlds top economy. Meanwhile, demand in China is growing as construction activities pick-up pace, backed-up by stockpiling of the industrial metal by the States Reserves Bureau.

Copper futures for May stood at $3.1305 per pound at 12:17 GMT in New York, gaining 0.19%, marking a fifth session of gains. The contract recorded the highest price since early March at $3.1390 per pound earlier in the session. The red metal gained 2.67% for the previous 4 trading days, pushed-up by demand in China and growth in the US.

The economic recovery of the US has been a strong long-term support for copper. Last week’s reports on durable goods orders and jobless claims in the US were the latest in a number of readings to bolster prospects for the economy. The metal-intensive durable goods orders for March reported a 2.6% growth from February. Further still, computers and electronics recorded the highest increase of orders since November 2010, while cars and light trucks posted the best annualized rate of sales since May 2007, adding to positive outlooks for the industrial metal.

Later today a report on pending home sales for March is expected to show activity has grown 1% on a monthly basis, after a 0.8% contraction for February. This week a number of major economic figures for the US will be released. Tuesday will feature the very important Consumer Confidence Index for April, forecast to be at 83, up from March’s 82.3, generating positive vibes for the US economy, as 70% of the GDP is generated through consumer spending. On Wednesday the Fed’s Federal Open Market Committee will hold its statement on monetary policy, reading the economic state of the US. A stronger economy directs investments away from commodities and towards equities, while a stronger US currency increases the foreign cost of all dollar-denominated materials, such as copper.

Chinese demand-supply imbalances have been the source of significant fluctuations on the copper market recently. Tightening of credit regulations made it somewhat harder for businesses to satisfy their demand for the industrial metal, pressuring the contract. However, demand for copper in China is growing, as construction activities pick up pace. Additionally, the state reserve is buying massive amounts of bonded metal, perhaps to fuel a targeted 7 million new units of public housing this year. The ambitious construction plan is being put forward in an attempt to fight rising home prices in the worlds second economy.

Technical View

According to Binary Tribune’s daily analysis, in case Copper May futures manage to breach the first resistance level at $3.1347 per pound, they will probably continue up to test $3.1448. In case the second key resistance is broken, the industrial metal will likely attempt to advance to $3.1607.

If the contract manages to breach the first key support at $3.1087, it may continue to slide and test $3.0928. With this second key support broken, the movement to the downside will probably continue to $3.0827.