Written Commentary
COPPER
We give the edge to the bull camp today as copper has extended the pattern of higher highs and higher lows this week, the macro environment is supportive, the dollar continues to fall, interest rates retain a lower bias and Shanghai copper warehouse stocks posted a significant decline. Despite recent evidence of manufacturing woes in the Western world putting a damper on copper demand, China reported a 17.8% surge in imported copper scrap this month, making for a 13.8% year-over-year rise. Despite this big jump in copper scrap, the Shanghai Futures Exchange as indicated already reported a 17% drop in copper stocks this week. At the same time LME stocks dropped to their lowest levels in 13 weeks on the back of ongoing disruptions of global mine-production in central and south America. However, with Chinese stocks tightening, and the dollar falling to its lowest levels in almost 5-months, the bulls must be wondering why copper prices aren’t rising sharply this morning. Perhaps the Bulls have seen most of their bullish hopes fulfilled and are looking for fresh supply disruption news to extend the October through December rally into the end of the year.
GOLD & SILVER
With weaker than expected global economic and inflation data flowing freely, and enhanced expectations of global rate cuts, the gold bulls have returned in force overnight and in turn have pushed gold prices to their highest levels since the December 4th, which is an all-time high. However, gold and silver might see minimal and temporary setbacks following the 730 US data window as expectations call for a sweep of better US activity. On the other hand, the PCE report is likely to be the final arbiter of the scheduled report slate impact on gold and silver price action today, with as expected PCE reading capable of lifting gold and silver from further proof of moderating US inflation. While the world markets already agreed on lower interest rates, seeing central bankers openly acknowledge that prospect could send gold through record highs in the weeks ahead. In the end, significant upside momentum this morning is in place, but the move has the feeling of being overdone. Not surprisingly, the bulls have kept silver prices trending higher and prices could surge if a Goldilocks economic report sweep from the US materializes as signs of residual growth and hope for easier monetary policy should inspire silver to play catch-up to the sharp rallies in gold.
Interested in more futures markets? Explore our Market Dashboards here.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
