Copper futures climbed to around $4.60 per ounce on Friday, marking a four-week high as the likelihood of the US Federal Reserve cutting interest rates as early as September increased. Hopes for additional stimulus measures in top consumer China also buoyed market sentiment. The metal is on track to gain more than 5% this week, set for its best weekly performance since mid-May.

Earlier this week, a surprise contraction in services activity and disappointing private employment numbers in the US bolstered the case for the Fed to start easing monetary policy soon. These economic indicators have shifted market expectations towards a potential rate cut, enhancing the appeal of commodities like copper.

In addition to the US economic outlook, markets are also looking forward to a key political meeting in China later in July. During this meeting, top Chinese officials are expected to announce new measures to support the economy, further boosting investor confidence in the demand for copper.

Moreover, data from the Shanghai Futures Exchange revealed that copper inventories in China have declined for the third straight week. This trend contrasts with the sharp increases in inventories observed since the start of 2024. The reduction in Chinese copper inventories indicates a tightening supply, which supports higher prices.

Conversely, copper inventories in LME-monitored warehouses rose to 186,450 tons, the highest level since October 2023. Despite the increase in LME inventories, the overall positive sentiment driven by potential US rate cuts and anticipated Chinese stimulus has kept copper prices elevated.

In conclusion, the recent surge in copper futures to $4.60 per ounce reflects a combination of factors, including the growing expectations of Federal Reserve rate cuts, anticipated economic stimulus in China, and tightening copper inventories in key markets. As the market awaits further economic data and policy announcements, the trajectory of copper prices will likely remain influenced by these significant developments.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst & Finance Saathi Telegram Channel for Regular Share Market, News & IPO Updates

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX & Upstox.