Written Commentary
COPPER
Copper found its footing overnight and managed a modest recovery off its lows after a sharp selloff this week that has taken the market down to its lowest level since late November. Shanghai exchange copper stocks fell another 16,536 tonne this week, for its eleventh straight weekly decline, and this has provided a boost to copper prices this morning. The pullback in Chinese equity markets in the wake of their surprisingly sluggish April inflation data has gone into a second day, with a moderate loss in the Shanghai Composite overnight. The disappointing economic data our of China does not bode well for copper demand.
GOLD / SILVER
Gold and silver extended their downside moves overnight. The next meeting between President Biden and Congressional leaders regarding the debt ceiling has been postponed until next week, and this news could provide some safe-haven support to gold. However, Speaker McCarthy remarked that one should not draw any conclusions from the delay. Gold ETF holdings increased 363,091 ounces yesterday (+0.4%), bringing them 0.5% higher on the year. This was their biggest one-day increase since April 2022 and their fifth straight day of growth. Silver holdings increased 2.187 million ounces, bringing them up 0.5% on the year. The increases suggest investor interest remained resilient in the face of yesterday’s selloffs. With the inflation data out of the way, it appears that the next opportunity for a gold rally would be failure to reach an agreement on the debt crisis or renewed concerns about the banking sector. Pac-West shares declined 23% on Thursday after it was reported that the bank saw deposits fall 9.5% ($1.5 billion) last week. Silver experienced a much more dramatic selloff than gold yesterday with a downside breakout to its lowest level since April 4.
PLATINUM / PALLADIUM
July platinum may have fallen victim to a risk off mood in the industrial metals on Thursday. Lower-than-expected Chinese inflation numbers raised concerns that demand is not recovering as quickly as expected, which can be particularly concerning to PGM bulls, as they may be counting on a big increase in Chinese vehicle sales. Another limiting factor is that the spec and fund net long could be approaching its highest levels since April 2021. July platinum fell right to the 50% retracement of the May 5-10 recovery bounce overnight; that retracement comes in at $1,090.30.
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