The easing of tensions between US and China, US Fed's dovish stance and low inventories on the LME will be the driving factor for Copper prices in the near term.
The year 2019 has started on a promising note for the red metal, Copper, with gains of around 11 percent on the LME and over 13.5 percent on the MCX in the first two months of 2019. The prime reason for this momentum has been the ease of tensions between US and China. Adding to this, supply disruption in Chile, the top producing Copper nation and relatively tight spot markets in China led to further momentum. Let us understand in detail what led to this momentum in the leader metal.
Trade war pain eases between US and China
The trade war remains the major factor behind driving the base metal prices. The trade spat between US and China had dampened the global growth prospects as they are the biggest economies in the world.
US President, Trump had vowed to increase tariffs on $200 billion worth of Chinese imports to 25 percent from 10 percent currently if the two sides cannot reach a deal by March 01, 2019. These two nations have been at loggerheads over trade and tariff issues for most of 2018 which resulted in drastic fall in metal prices.
However, situations seems to have changed at present with Trump expressing his optimism about reaching a deal with China over trade issues.
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