May 27, 2024

Copper trading: the upside for now

Choosing the right package of assets to invest in has always been a challenge for both new and experienced investors. The markets are volatile and the economic conditions affecting them are also changing at a rapid pace, so the right choice of an investment portfolio requires not only the ability to analyze current conditions but the skill of making predictions for the future.

The market of commodities for a long time has been considered the most stable sector where major fluctuations happen quite rarely. That’s why it’s interesting to learn what experts think about the future of some raw materials as financial assets. Today, we are going to learn more about their insights on copper trading.

Introduction to XCU

Copper is one of the most demanded raw materials across different industries. Its multifunctionality and flexible nature contributed to its wide use thousands of years ago, and its rich deposits made it less scarce and more popular than gold or silver.

Even if you don’t know this, today, you use copper-made products on a daily basis since it’s used to manufacture generators, batteries, motors, electric appliances, electronics, wires, and even pipes.

In 2022, 22 million metric tons of copper were mined. You can compare it to 208,874 tonnes of gold mined throughout history to realize why despite its wide use, copper isn’t as valuable as gold.

How to trade copper 

Copper is traded under the XCU ticker symbol. One of the easiest ways to benefit from XCU price fluctuations is to trade copper CFDs. These are securities that bring profits from the price difference between two price points if a trader manages to predict the direction of the price changes.

One of the benefits of trading XCU CFDs is that you don’t need to pay for copper storage. Also, this approach provides you with the possibility to benefit from both rising and falling prices. Your success depends more on your skill to predict the direction, rather than the actual trend, which would be relevant for you if you just bought a certain amount of this metal.

The upside of trading XCU

The commodity market offers numerous good alternatives to XCU. Nevertheless, there are several considerable reasons why speculating on this commodity is beneficial at the current state of the market:

  • Diversification opportunities: If your investment portfolio consists only of equity securities, there’s the point in diversifying the risks. Copper is a good instrument for this since it’s not related to other asset classes, which offers good diversification to avoid potential losses.
  • Instrument against economic uncertainty: Similar to the majority of commodities, mainly metals, XCU serves as a safe haven during periods of global market turbulence. Metals tend to retain their value, meaning you can save your funds by investing in them in advance.
  • Inflation hedging: During the period of inflation, currencies and stocks tend to fall in value because of their relation to the markets and goods. This is non-relevant for commodities, including copper, so you can mitigate the potential drawbacks of inflation by investing in XCU.
  • The trend for energy-efficient solutions: The wide use of copper in the electronic industry increases its supply together with the growth of the demand for sustainable solutions. That fact is that this metal is a valuable resource in the manufacturing of batteries, widely used in the production of electronic vehicles. Considering this, experts predict, that by 2030, the use of copper in this sector will increase up to 250,000 tonnes per year.
  • The transition to 5G: This transition started several years ago but it’s not complete so far, so investors have the possibility to benefit from the future wider use of copper in this industry. The demand will be accelerated due to the necessity for copper in the production of cable to connect the increasing number of cutting-edge pieces of equipment and 5G stations.

The Bottom Line

Considering the prediction of experts, we believe the XCU has great potential for the future. Nevertheless, you should consider this article only as a review of available insights but not as a piece of investment advice. Make your own research, and conduct fundamental and technical analyses of the commodity to make your own well-thought-out investment decision

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