In the New York market trading on Tuesday (August 6th), copper futures prices on the Chicago Mercantile Exchange (COMEX) showed a significant upward trend, mainly driven by market expectations that the Federal Reserve will implement interest rate cuts in September and the overall rebound of global financial markets.
According to data, as of the close, COMEX's copper futures prices have risen by 2.4 cents to 2.8 cents, indicating market investors' optimistic attitude towards the future trend of copper prices. Among them, the most actively traded September 2024 copper contract rose by 2.8 cents, reaching a 0.70% increase, and finally closed at $4.027 per pound. This price level not only sets a new high in recent times, but also further consolidates the strong position of copper prices in the metal market.
The strengthening expectation of the Federal Reserve's interest rate cut is one of the important factors driving up copper prices. The market generally expects that in response to the economic slowdown and inflationary pressures, the Federal Reserve will announce a rate cut at its upcoming monetary policy meeting. The implementation of interest rate cuts will help reduce the borrowing costs of enterprises, stimulate their increased investment and production activities, and thus drive demand for industrial metals such as copper. In addition, interest rate cuts may also boost consumer confidence, promote the growth of consumer demand, and further drive up copper prices.
At the same time, the overall rebound in global financial markets has also provided strong support for copper prices. Recently, with the easing of geopolitical tensions and the improvement of global economic data, the global financial market has shown a trend of stabilization and recovery. The stability and improvement of financial markets not only enhance investors' confidence in economic growth, but also increase their enthusiasm for investing in commodity markets. Copper, as an important industrial raw material and safe haven asset, has naturally become the focus of market attention.
Despite a significant increase in copper prices on Tuesday, market trading volume has decreased. The data shows that the trading volume of COMEX copper benchmark contract on Tuesday was 54399 lots, a decrease of nearly half compared to 102987 lots on the previous trading day. This change may indicate that some investors have chosen to take profits or adjust their positions after the price has risen, demonstrating the cautious attitude of market participants when facing price changes.
In addition, changes in holdings are also worth paying attention to. On Tuesday, the short position (i.e. the number of open contracts) of COMEX copper futures decreased from 116575 lots on the previous trading day to 109933 lots. The decrease in holdings may indicate a reduction in the divergence among market participants regarding future price trends, or some investors may choose to take a wait-and-see approach after the price rises. This change may further affect the future trend and volatility of copper prices.
