The price of copper hit a record near $6.63 a pound on June 2, supported by the same AI data center that powers Nvidia, yet it now trades at about $6.27, down about 6% from that peak.
Options traders are leaning to the upside, but the chart, dollar and physical market hedgers are all showing caution. The demand story is real, but the near-term setup looks mixed, and many signals are now pointing in the same direction.
Why has the AI boom made copper indispensable?
all The AI data center runs on copper. The power delivery, cooling, and bus rails behind the design are copper-intensive, tying the metal directly to the same trade that powers Nvidia and the broader AI complex.
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The scale is large. A single large-scale AI facility can use up to 50,000 tons of copper, According to the Copper Development Association, Compared to 5,000 to 15,000 tons for a traditional data center.
JPMorgan estimates that data centers alone will need about 475,000 tons of copper this year, a sharp rise from the previous year.
Nvidia CEO Jensen Huang said copper will dominate chip interconnects for as long as possible before any shift to optics. This demand is in addition to the structural shortage, with Standard & Poor’s Global forecasting a shortfall of 10 million tons by 2040.
The status of the application is not in doubt. The real question is whether the latest push had a solid foundation.
Double top and dollar rise breaks record
The price chart raises the first warning. Copper form double toptwo failed attempts to break the same resistance near the record, a pattern that often represents a stalled rally.
The double top is a bearish setup where the price tests the ceiling twice and fails each time. Copper recorded exactly that against its record zone in May and early June.
The dollar deepens the pressure. The US Dollar Index, or DXY, which measures the dollar against major currencies, rose, with copper stalling.
A rising dollar makes dollar-denominated copper more expensive abroad, and higher yields, along with that, pull money into cash. This background determines the division of sites.
Options traders turned bullish as hedgers retreated
Here the gap gets worse. In CPER, the US Copper Index Fund, an ETF that tracks copper futures, the short ratio has turned bullish. The volume ratio has fallen to around 0.11 from a peak of 0.27 on June 2, with the open interest ratio near 0.19.
A put-call ratio less than 1 means that calls outnumber puts, which is an upward trend. Options crowd leans toward copper even as chart and dollar warn.
The futures market disagrees with that. In the CFTC’s latest Commitments of Traders report, which shows who is holding futures positions, trade hedgers, the players in the physical market closest to copper, are sitting heavily short and trimming long positions by 3,254 contracts.
A bullish options bet is against the smart money.
Speculators rallied as the turn signal still supported bulls
The same report explains where the purchasing comes from. Non-commercial speculators held 111,525 long contracts versus only 32,692 short contracts, and added 5,852 long contracts to the highs. Crowded speculative buying could sharpen a reversal if sentiment turns.
The decisive word is the Copper and Gold Investor Turnover Index. This is a custom BeInCrypto metric that highlights whether investors prefer growth through copper or security through gold.
A high reading shows an appetite for growth, while a low reading shows a shift to defensiveness.
The index is located near 1.23, near the top of its range. This is important because it fell sharply in January at the copper peak, indicating caution despite strong prices, and that a loss of growth leadership preceded the correction.
Unlike January, the indicator is now rising along with the price, rather than falling against it. This indicates a growing appetite for growth-sensitive assets, likely linked to the strength of AI stocks driving the broader build-out. Right now, the turn signal is on the bulls’ side of the split.
What are you watching next?
the The structural state of the copper remains intactit is being implemented by AI architecture (data centers) that shows no sign of slowing down. However, near-term signals tend to be cautious, and some signs will show which way the next move will break.
If you’re tracking copper from here, watch:
- Copper and gold turnover indicator. It is rising in price, and is supporting the bulls at the moment. A decline would warn that the desire for growth is fading, as happened in January.
- Double peak near the log. A break above this level reopens the uptrend, while another failure confirms the ceiling.
- US dollar and returns. Continued strength keeps pressure on dollar-denominated copper, while a reversal would remove headwinds.
- Identify trading hedging locations. If short covering trades begin, it will indicate that players in the physical market see further upside.
The bullish options crowd and cautious smart money cannot be relevant for long. The next step depends on which camp flashes first.
this post The AI boom depends on copper, but its recent record hides a warning appeared first on BeInCrypto.
