The iPath Dow Jones-UBS Copper Subindex Total Return ETN (NYSEArca: JJC), an exchange traded note that tracks copper price movements, is off 3.2% year-to-date.
Unfortunately, underscoring the weakness faced by the red metal, all of JJC’s 2016 has been accrued over the past week and fundamental factor do not bode in favor of more upside for copper.
In what could prove to be a cautionary tale, JJC’s laggard status could morph into an all out decline as copper prices approach a critical technical juncture.
While production cuts may support prices now, the bounce in the copper market may be short lived as fundamental factors remain weak.
Many industrial metals and miners rallied on the belief that China would support growth through stimulus measures, augmenting demand for metals while enticing investors to jump back in. Moreover, the depreciating U.S. dollar made USD-denominated resources cheaper for foreign buyers. The ongoing global low-yield environment also pushed investors toward more attractive assets, like commodities.