From the technical analysis team at Goldman Sachs — 3 month copper completing a “double top.”
Selling on Wednesday was blamed on the news from Rio Tinto – waking the world up to news that China is no longer necessarily a buyer of last resort. Says Goldman’s Kevin Edgeley in note to clients:
We have stressed our bearish bias on Copper in a number of Techview reports since the triple top breakout below 7611 in early August. The longer term double top break below 5250 last week signals further impulsive declines. The market staged a short covering rally from last Friday’s low as Equity markets recovered from impulsive losses, but metals prices are now turning lower again.
Looking ahead from the major financial rescue package, we still see weaker growth impacting heavily on industrial commodities, in particular slowing Chinese demand for metals. Renewed weakness in Copper today is flattening the short term bullish daily momentum and we still see scope for further downside acceleration and stick with our double top breakout target below 5250 to the 3200 area.
Related links:
Commodities slide on falling demand – FT.com
The London mining disaster – FT Alphaville