Copper: Supply Disruptions End, Weighing on Price

Despite a weakened USD this week, copper prices traded lower as supply concerns eased. Reports note that the 43-day strike by workers at BHP Billiton’s Escondida mine in Chile has now come to an end after workers invoked a rarely used legal provision to extend their old contracts. Alongside this, the recent strike at Freeport-McMoRan’s Grasberg mine in Indonesia has now ended, and production has resumed.  The potential end to these supply disruptions, which have boosted prices over recent weeks, is outweighing the effect of the weaker USD and keeping prices pressured.

The outlook for copper is still fuelled by support linked to Trump’s proposed infrastructure expenditure as well as fresh bullish signals from China. However, it is clear that Trump’s infrastructure spending is not going to be delivered quickly which is also drawing doubt about the scale of the program.

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The consolidation continues in Copper where directional momentum has dried up, and the price is ranging just below 2016 high. If price breaks to the topside focus is on the bearish trend line and 2015 high. Below market, key levels are the December 2016 low and below that, the mid-2016 highs.

Iron Ore: Iron Falls on As Steel Weakens in China

Iron prices also fell lower this week, falling to their lowest levels in two months as steel prices in China fell on demand concerns. Iron ore prices are now down over 20% from the recent high levels reached last month. The outlook for iron remains positive however as analysts are expecting steel production to rebound in China. The rally in iron over the early part of the year was fuelled by expectations of stronger construction demand in China along with official efforts to curb excess steel capacity.

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Iron ore prices are now capped between support at the $84 level which was key resistance over the last two months of 2016 and resistance at the $87 level. If price can break back below the $84 mark, it looks like Iron prices will have put in a lower high, signaling potential for a deeper correction lower.

Gold: Yellow Metal Rallies on Weak USD

Gold prices rallied this week as the US Dollar continued to slide following the recent March FOMC which saw the Fed refrain from upgrading their rate path projections over 2017. The key focus in the short term is whether President Trump can pass his healthcare bill to roll back Obamacare.

This issue represents a significant test of the President’s legislative ability and will send a signal about whether he can keep his promises made to big business. A failure for the President here will cast doubt over the prospects of his plans to cut tax and boost infrastructure spending, which would rock investor sentiment and send gold higher.

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Gold prices continue to battle around the 1240 level which is key short term resistance. Though price broke above that level in February, it consequently slipped lower but has now rallied back up to once again test the level. Long term trend line resistance is sitting just above market which will provide a major test to bulls if the price does break to the topside. The key level to the downside is 1204 which was the March closing low.