Can weaker yuan pressure copper price despite strong US demand?

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Copper gains 0.49% today to $6.43

Highlights

Chilean copper production fell to the lowest level in twenty years in the third quarter, constraining global supply from a major region.
Chinese buyers face increased difficulty accessing dollar-denominated copper due to a weaker yuan, affecting trading flows alongside strong US import demand.
Copper closed at $6.4335, up 0.49% for the day, with technicals suggesting bearish momentum and a projected range of $6.3595 to $6.5075 over the next 2 to 3 days.

Supply constraints and policy risks reshape copper market sentiment

Chilean copper output fell to a two-decade low in the third quarter, according to Commerzbank, reflecting tightening global supply from a critical producing region. This fundamental constraint offers underlying support to the international copper market even as short-term trading sentiment is shaped by risk aversion ahead of the US midterm elections, as highlighted by TradingView. Despite evidence of strong US import demand noted by FXStreet, a weaker yuan is making dollar-priced copper less accessible for Chinese buyers, adding another layer of complexity to trading flows. Traders are also considering how potential shifts in US technology policy following the elections may affect future metals demand, according to Finimize.

Conflicting momentum as mixed indicators temper intraday strength

HG is trading above the MA-20 and MA-200 but remains below the MA-50 on the hourly timeframe. The Ichimoku Kijun at $6.366 is identified as immediate support. Technical indicators present mixed signals: MACD and ADX both show strong selling momentum, while RSI and CCI are positioned in neutral zones. Stochastic RSI is in the overbought territory, hinting at elevated short-term correction risk. Bull/Bear Power is only marginally positive at 0.0321, indicating slight intraday buying strength, and the Awesome Oscillator is neutral. These readings point to a complex technical environment, marked by underlying bearish pressure despite some intraday buyer activity.

Balanced breakout odds with slight downside risk dominates near term

For the next 2–3 trading days, copper is expected to fluctuate within the $6.3595–$6.5075 range, reflecting typical volatility bands for the current environment. Scenario probabilities remain nearly balanced, with a slightly greater chance (52%) of a downward move compared to a potential 48% upside. A decisive close above $6.5075 would shift the outlook toward a bullish breakout, while a slip below $6.3595 could accelerate downside momentum. Until a clear breakout, the most likely outcome is continued range-bound consolidation.

Viktoras Karapetjanc, expert at Traders Union, sees the copper market as fundamentally supported by a rare supply squeeze from Chile. He notes this supply backdrop offsets current risk aversion linked to US midterm elections and mixed technical indicators. Although near-term consolidation dominates, robust US demand and any positive policy shifts could quickly tip the balance. He believes underlying macro strength is building. "If copper decisively clears $6.5075, I expect bullish momentum to accelerate, but for now, patient consolidation prevails."

Earlier, analysts noted that copper faced sustained selling pressure amid weak technical signals and external demand challenges. The current analysis adds a layer of fundamental support from tightening Chilean output, suggesting traders should monitor for a shift in volatility if prices break through either side of the $6.3595–$6.5075 range in the coming sessions.

Source of Data: HG Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.