Glencore (LON: GLEN) share price continued its strong recovery this week as investors focused on the commodity sector. The stock surged to a high of 477.60p, its highest point since January 2nd. It has risen by more than 30% from its lowest point in 2024.
Copper price is soaringMining companies are doing well, helped by the ongoing recovery of commodity prices around the world. As I wrote on Wednesday, Antofagasta has become the best-performing company in the FTSE 100 index this year.
Glencore’s stock is surging because of the ongoing revival of the copper market. Data shows that the price of copper rose to its highest point since June 2022. It has risen by over 24% from its lowest point in 2023 and is a sign that the global economy is bouncing back.
Copper is an important metal in Glencore’s business. It produced over 1 million tons of copper in 2023, generating billions of dollars in revenues and profits. In all, its metals and minerals business had over $35 billion in revenues and an adjusted EBITDA of $5.4 billion.
Glencore is also benefiting from the resurgence coal business. Data shows that the price of coal has jumped to $121, much higher than the year-to-date low of $94. This is notable because Glencore is one of the biggest coal companies in the world.
Coal demand will continue rising even as countries invest more money on renewable energy projects like wind and solar. The main threat for coal is natural gas, which is one of the most popular energy source in some countries.
Glencore is in the process of transitioning from the coal business, a strategy I believe is wrong. It is doing that by spinning off its coal business and combining it with that of Teck Resources.
Meanwhile, Glencore is set to benefit from its marketing operations since it one of the biggest commodity traders in the world. It moves millions of barrels of oil every day, which helped it make over $186 billion in revenues in 2023.
Glencore and other trading companies like Vitol, Trafigura, and Mercuria have been swimming in cash in the past few years. According to FT, trading profits jumped to over $104 billion in 2023.
Therefore, as we saw with General Electric, there is a possibility that Glencore’s stock will do well ahead of its spin-off. GE shares jumped sharply ahead of its energy business spin-off this year.
Glencore share price forecast
The daily chart shows that the Glencore stock price has been in a strong bullish trend in the past few weeks. It has moved back to the rising wedge pattern that formed in 2023.
The stock is now about to form a golden cross pattern, which happens when the 200-day and 50-day Exponential Moving Averages (EMA) cross each other.
Also, the Relative Strength Index (RSI) shows that there is a bullish momentum going on. Therefore, the outlook for the stock is bullish, with the initial target being at 500p.
The post Glencore share price is nearing a golden cross formation appeared first on Invezz
