Copper Lower on Thursday

Copper prices are softening today following a spike higher yesterday as risk assets cheered news of the US/Iran ceasefire. Energy prices are USD both plunged yesterday as traders reacted to news that the US and Iran have paused attacks to allow for broader negotiations. Risk assets were further bolstered by news that the Strait of Hormuz would reopen fully during that window also. However, the ceasefire is looking a little more uncertain today and we’re noting a more cautious tone across markets, seeing commodities prices cooling a little from yesterday’s highs for now. Iran has accused Israel of breaching some conditions of the ceasefire already and the Strait of Hormuz is still mostly blocked.

Bearish Risks

If fears of the ceasefire collapsing start to gain traction, this could see copper prices falling amidst a broader wave of risk aversion. Goldman Sachs warned earlier this week of downside risks to copper if the Strait remains closed with higher energy costs seen weighing on global economic prospects and copper demand. For now, traders await incoming headlines around the ceasefire. If negotiations can start to progress this should revive bullish copper momentum but any signs that the ceasefire is crumbling will be firmly bearish near-term.

Technical Views

Copper

The rally in copper has stalled for now into a further retest of the broken bull trend line, ahead of the 5.8550 resistance. This remains the key hurdle for bulls near-term with 6.1090 the higher target above if price can breach that resistance zone. To the downside, 5.6260 is the initial support to watch with 5.4415 the deeper bear target on a breakdown.