Could Copper's Dip Present a Buying Opportunity?

Copper prices may have fallen from their recent highs, but it could be an opportune time for investors to buy on the dip with the Global X Copper Miners ETF (COPX).

“While the trend is clearly downward since hitting record highs a month ago, copper is still trading within earshot of five digits per tonne,” a article explained. “The recovery since the depth of the pandemic lit a fire under copper stocks, but not all miners have been able to take full advantage of the rally. In fact, many big names have seen output drop this year, or showed tepid growth.”

COPX seeks to provide investment results that correspond generally to the price and yield performance of the Solactive Global Copper Miners Total Return Index, which is designed to measure broad-based equity market performance of global companies involved in the copper mining industry. The fund is up over 30% so far this year.

“This ETF gives investors an opportunity to achieve exposure to copper without encountering the nuances of a futures-based strategy,” an ETF Database analysis said. “For investors looking to bet on increased demand for a raw material used widely in various applications, COPX is a nice option.”

“COPX often trades as a leveraged play on the underlying natural resources, meaning that this fund can experience significant volatility but be a powerful tool for profiting from a surge in commodity prices,” the analysis added.

Furthermore, COPX can give investors alternate exposure to industrial metals to help hedge against inflation.

COPX Chart

Momentum Still on COPX’s Side?

The technical analysis could be supporting momentum for COPX, despite the dip in copper prices. Right now, its relative strength index (RSI) sits in between overbought levels and oversold levels when applied to the year-to-date chart.

Furthermore, the 50-day moving average is still trending higher than the 200-day moving average, which could portend to more short-term strength ahead. The price of COPX just dipped below the 50-day moving average, which could give price-sensitive investors or short-term traders a chance to get in on copper before another rally begins.

COPX Chart

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