The copper market and exchange traded funds (ETFs) are on a hot streak, backed by good fundamentals and a weaker dollar. But analysts are still a little wary about speculators’ role in the quick rise of copper prices.
Yesterday, copper closed at a 26-month high, reports Claudia Assis for MarketWatch. The metal has gained 11% year-to-date.
- Analysts believe the higher price of copper is sustainable, pointing to underperforming mines, labor disputes, few new mines opening and high demand from China. [What Copper ETFs Say About the Economy.]
- Goldman Sachs is similarly bullish, raising its 3-, 6- and 12-month copper projections, according to MarketWatch. The investment bank believes that inventories will deplete in the next five quarters, which would lead to “periods of extreme volatility and price spikes.” [Copper ETFs for Bullish Sentiment.]
- As Asia continues to grow, traditional copper applications will continue to increase, remarks Paul A. Ebeling for Live Trading News. Copper is used in construction, electrical applications and consumer electronics.
- Recent gains are mostly attributed to improving industrial demand and concerns about supply, but a weaker greenback will be a copper buying opportunity for foreign investors since copper contracts are denominated in the U.S. dollar.
For more information on copper, visit our copper category. According to the ETF Analyzer, there are two copper ETFs – both of which own equities – and one copper exchange traded note (ETN), which tracks a basket of copper futures:
- First Trust ISE Global Copper (NASDAQ: CU)
- Global X Copper Miners ETF (NYSEArca: COPX)
- iPath DJ-UBS Copper (NYSEArca: JJC)
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.