Copper has rallied again on Thursday as we continue to see a lot of noisy trading out there.
That being said, this is a market that will continue to pay close attention to interest rates and of course risk appetite.
Keep in mind that the Strait of Hormuz, of course, has a major influence on the way commodities travel around the world and if there's any hope that it is in fact going to open up, then that opens up the possibility of more copper demand coming online as people are trying to fix supply.
Demand Drivers and Geopolitical Factors
Copper has been strong for some time due to electrical demand and of course artificial intelligence. With that being the case, I think you have to look at this through the prism of a longer-term demand scenario and if we do in fact get some type of pullback here, it could end up being a nice buying opportunity. I don't have any interest whatsoever in shorting copper and I look at the $6 level as crucial and important.
The market will continue to be noisy, but that's probably to be expected in any asset you are trading at the moment as we continue to see a lot of questions asked about what happens next. After all, peace in the Middle East is fragile at best but even if we get that, there are concerns about supply chain disruption across the board and inflation.
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Inflation alone probably drives copper higher, so I think this is a nice buy on the dip longer-term type of setup just waiting to happen, but I also recognize that this is a market that can get quite choppy so a lot of patience will probably be necessary to benefit from a potential run higher towards the $6.50 level.
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