Copper's Bull Run Ahead: Technical Support, Dollar Weakness, and China’s Stimulus Drive Near-Term Gains

The copper market is poised for a near-term rally, with prices finding critical support at $9,500/tonne while geopolitical tailwinds and technical validation align to push toward $9,950/tonne—a level last seen during March’s historic highs. Investors who act now can capitalize on this confluence of factors, but must remain vigilant to mitigate risks from lingering trade policy uncertainties.

Technical Validation at $9,500/tonne: A Buyer’s Sweet Spot
Copper’s $9,500/tonne level has emerged as a psychological and technical anchor. Recent trading shows prices rebounding sharply from this threshold—on May 20, LME copper fell to $9,495/tonne before rebounding, underscoring its role as a floor. Below this, the next support is $9,455/tonne, but traders should note the 200-day moving average ($9,375/tonne) acts as a long-term safety net. The immediate target for bulls is the $9,950/tonne resistance, which aligns with the 50-day moving average ($9,489/tonne). A sustained breach here could propel prices toward $10,500/tonne, as seen in Goldman Sachs’ $5.20/lb ($11,500/tonne) 2026 forecast.

The Dollar’s Retreat Fuels Copper’s Momentum
The U.S. dollar’s sideways consolidation since May has been a mixed blessing for copper. While the USD index stabilized, it remains below its long-term range—a trend that continues to favor commodities. A weaker dollar reduces the cost of copper for non-U.S. buyers and incentivizes speculative flows into the metal. Crucially, Federal Reserve reluctance to cut rates has limited dollar strength, even as inflationary pressures from tariffs ease. Should the Fed pivot toward easing, the dollar could slump further, supercharging copper’s rally.

China’s Monetary Easing: A Tailwind for Copper Demand
China’s recent infrastructure spending boom and its $200 billion local government bond issuance are injecting liquidity into the economy. Copper strip prices in South Korea, a proxy for Asian demand, rose 5.7% to $11,890/tonne in May—a sign of improving industrial activity. While the ICSG forecasts a 2025 surplus, this assumes demand growth slows. If China’s stimulus spurs stronger-than-expected manufacturing output, inventories could tighten, pushing prices higher.

The energy transition remains a long-term driver: every electric vehicle requires 80kg of copper, and renewable infrastructure demands four times more copper per megawatt than fossil fuels. Short-term, China’s focus on high-voltage grids and EV charging networks ensures copper remains central to its growth narrative.

Navigating Geopolitical Risks: Hedging Strategies for the Post-90-Day Tariff Phase
While optimism reigns, the 90-day U.S.-China tariff truce is a fragile foundation. Investors should hedge against renewed trade tensions by:
1. Using options: Buy call options with strike prices at $9,950/tonne to lock in gains if tariffs ease.
2. Diversifying exposure: Allocate 30% of copper investments to Asia-Pacific-focused ETFs (e.g., JJC) or miners with exposure to Chinese demand (e.g., Codelco).
3. Monitoring the Shanghai Futures Exchange: SHFE inventories, which rose to 220,000 tons in May, signal regional supply dynamics—declines here could ignite a backwardation-driven rally.

Buying Opportunity Below $9,700: Time to Act
The $9,500–$9,700/tonne range is a high-probability entry point. A close above $9,700 invalidates near-term bearishness, setting the stage for a run to $9,950/tonne. Even if prices dip below $9,500—a 2.5% pullback—the 200-day average and China’s stimulus backstop offer solid downside protection.

Investors should target positions at $9,600/tonne, with stops below $9,450/tonne. For maximum impact, pair copper exposure with inverse USD ETFs (e.g., UDN) to neutralize currency risks.

Conclusion: Copper’s Technicals and Fundamentals Are Aligned—Don’t Miss the Rally
The stars are aligned for copper: dollar weakness, China’s stimulus, and technical support at $9,500/tonne create a compelling case for gains toward $9,950/tonne. While trade risks linger, hedging strategies can mitigate downside. This is a rare moment where short-term momentum and long-term fundamentals converge—act now before the next leg higher erases entry opportunities.