Copper prices power to 26-month high, some say entering overbought territory (NYSE:FCX)

U.S. copper futures climbed to their highest settlement in more than two years on Monday, but some analysts warn the metal that has jumped 28% in the past three months has reached overbought territory.

Copper prices have been “on a tear… reflecting optimism over renewed global growth led by the U.S. and supported by the hope for a bottoming out in the Chinese economy,” analysts at Pave Finance write, according toMarketwatch, but the metal has topped its “preferred measure of overheated sentiment,” where any gain or loss exceeding 25% is a “sign of extreme sentiment.”

If copper starts trading in a tight range and does not fall significantly, Pave Finance would see “a sign of consolidation before another rally, which is bullish for the world’s economic outlook,” but if prices reverse from current highs, it would be a “warning sign that economic conditions, already weighed down by the overhang of tight credit conditions, could slow down appreciably.”

While still “firmly positive on price action,” John Caruso at RJO Futures tells Marketwatch he “fully” acknowledges that copper is now in overbought territory, noting the Commodity Futures Trading Commission’s Commitments of Traders report is now approaching record net speculative long positions, which he sees as a contrarian indicator.

Front-month Comex copper (HG1:COM) for May delivery closed +2.3% to $4.8045/lb, its second highest settlement history and its best level since March 4, 2022.

ETFs: (COPX), (CPER), (OTC:JJCTF)

S&P Global Ratings said Monday it upgraded copper producer Freeport McMoRan (NYSE:FCX) from BB+ to BBB-, into investment-grade territory.

S&P said its outlook on Freeport (FCX) is stable, and its long-term view of copper demand is good, reflecting its expectation that the company’s debt leverage will remain low.

Freeport’s (FCX) solid credit ratios should persist this year and beyond, with robust earnings and moderate debt usage, S&P said.