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For the time being, monetary policy remains unchanged. Interest rates in many industrialized economies have remained at or near 0 percent, indicating that global monetary policy has remained accommodating. However, inflation figures are continuing to rise, putting more downward pressure on many of these markets’ already negative real rates. Non-interest earning investments such as copper, gold, silver, and platinum become more appealing in such a scenario, as the potential for price gain persists. The recent ‘hawkish surprise’ at the June Fed meeting pushed the dollar higher, thus causing copper to fall sharply. In his following testimony to Congress, however, Jerome Powell sought to dispel any illusions of impending rate hikes, stating that inflation is projected to fall back toward the Fed’s longer-run goal, leaving the door open for loose monetary policy in the United States. Supportive Fiscal Policy – US Infrastructure BillUS President Joe Biden’s planned infrastructure package will benefit a number of sectors in the US economy, many of which are becoming more reliant on copper. Copper is used in renewable energy projects because it has one of the highest thermal and electrical conductivity profiles of any metal. Biden’s bill now prioritizes the transition to cleaner energy sources. Copper is also expected to benefit from upgrades to existing traditional infrastructure, namely roads and telephones, because the conductive metal is widely employed in cabling. Copper’s Global Usage Is Increasing: Chart ICSG is the source of this information. The World Copper Factbook 2020 is a compilation of information about copper in the world. Insatiable Demand in China China continues to be the world’s top copper importer by a considerable margin, and has been a major factor in the metal’s price rise during the last 15 months. China, on the other hand, has expressed displeasure with the high level of copper prices and has threatened to sell strategic reserves in an effort to temper the commodity’s recent advances. Despite this, China’s ambitions to expand its economy continue to drive up demand for the metal. The Increasing Use of Copper in Asia (China) is depicted in this diagram. ICSG is the source of this information. The World Copper Factbook 2020 is a compilation of information about copper in the world. The Basic Technical Setup Since March 2020, copper has followed the long-term trendline, indicating the metal’s rapid increase. I set a target of 10,000 in the previous Top Trading Ideas update, which was eventually met before the new high of roughly 10,745. Copper has been trading within what appears to be a bull flag – a bullish continuation pattern – since then, and has recently rebounded from a confluence area (yellow rectangle). At the long-term rising trendline and the lower bound of the bull flag, which occurred at the 23.6 percent Fibonacci level, the area of confluence was established (drawn from the 2020 low to May 2021 high). The long-term uptrend is still supported by a powerful recovery above this zone, indicating the 10,000 mark once more. However, it should be noted that the latest rally could simply be a continuation of trading within the bull flag. Before the bullish continuation scenario becomes more realistic, it must break and close above the bull flag. View each DailyFX Analyst’s favorite trades for the third quarter. From the DailyFX Free Trading Guides, download our new 3Q top trading chances guide!/nRead More

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