The copper market has fallen a bit during the trading session here on Thursday as the Federal Reserve remains somewhat restrictive in its monetary policy. That is starting to weigh upon the copper market.
However, the bond market itself looks like it is easing slightly. I suspect this could end up being a nice buying opportunity given enough time, and it is worth noting that there seems to be a band of demand from $6.40 to $6.50.
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So, the question isn't so much about whether or not the Federal Reserve will remain restrictive. Rallies at this point in time would make a certain amount of sense on some type of short-term pullback, but it looks like copper really does not have anywhere to go at the moment as we are waiting to, I believe, figure out what the economy is actually doing.
The GDP numbers rose during the early part of the session in the United States, but it is also worth noting that PCE numbers are basically coming in where they should. I think most of the market expects the Federal Reserve to hike in December with about an 80% probability, but what is interesting is that, when you look further out in the spectrum of rates, there is a 40% probability of a hike in March. I think maybe that is part of what is weighing on copper. People are worried about financing costs.
AI demand still matters
Nonetheless, AI data center demand is still a thing out there, although we have seen some ripples in the credit markets for that, and I think that is a big factor in keeping copper somewhat stable.
The market right now, though, I believe, is going to continue to favor range-bound trading, meaning anytime you get some type of significant sell-off, buyers are more likely than not willing to pick it up on the cheap. So, I am going to drill down to shorter time frames in order to take advantage of that.
I am not looking for explosive moves. I think maybe copper needs to digest some of its earlier gains, and we may very well stay between $6.40 and $6.75 for the time being.
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