Before the US elections last year I wrote that one important development to be looking out for is if the Democrat party were able to win both the House and the Senate races. This looks to now be the case.
One of the consequences of this is that it mean a strong move from green investments likely to benefit from Biden’s ambitious green plans. With both houses now sitting under Democrat control it will be easier for Biden’s policies to pass through the US administration. Joe Biden has said , prior to the US elections, that he will spend $2 trillion over four years to improve infrastructure, create zero-emissions, public transport and create clean energy jobs. That means Green investments now stand to gain heavily with a Biden Presidency. Copper, alongside other commodities, stand to gain on Green investments.
Green investments rising before the US elections
Now note that even before the US elections Wilderhill New Energy Global Innovation Index saw strong gains as they anticipated a Biden victory. Green technology relies heavily on copper for conducting electricity so copper looks set for further gains in the short and medium term. At the very least copper looks a buy on pullbacks for the medium term. For the upside 4.000 is the next key target for buyers. We can see a short term entry for copper marked on the chart. Over the week we will be on the lookout for any decent price action that can be uses to define and limit risk for copper buyers.
Washington and Fed support
We now have two areas of stimulus from the US, form both the Fed and Washington. This means that any problems in the US economy will be met with spending power vs new debt. This spend, spend, spend mentality should ensure dip buyers keep stepping in for the key commodity copper. The key risk to this outlook is if the vaccine for COVID-19 proves ineffective and we see risk off tones. A risk off market will encourage a sell off in commodities like copper.