Written Commentary
COPPER
Despite a four-day high overnight, we are suspicious of the upward track in copper prices today following another disappointing Chinese economic report overnight. Overnight, China also reported increases in all its metals warehouse stocks this week with copper inventories jumping 11% to 40,516 tonnes and LME copper stocks also rose yesterday to 180,600 tons, erasing this week’s entire drawdown. In short, the bullish exchange stocks news from earlier in the week has shifted bearish with the increase in Shanghai copper warehouse stocks compounded by the disappointing Caixin Chinese service PMI which came in below estimates. The Panamanian government back-tracked on their threats to cancel First Quantum’s mining license but the threat of a Moody’s downgraded the nation’s debt, makes it imperative copper exports will continue in order to keep the government funded. The copper market got a decent bid overnight on the back of a larger than expected US factory orders print. US Factory orders are now growing at their fastest pace since January of 2021.
GOLD / SILVER
The gold market has held steady overnight as the world awaits this morning’s US non-farm payrolls data. On the political front Asian nations are now asking Iran to go get their foreign nationals from Hamas, while Anthony Blinken arrives in Israel to try and negotiate a “humanitarian pause”. This comes after the IDF started to demolish houses belonging to terrorists in Gaza. Israeli defense forces were reported to have cut Gaza into two, wedging their forces from the Mediterranean coast to isolate the Hamas-rich northern part of Gaza. This kind of action could easily attract other participants in the region should the Israelis get bogged down in a drawn-out urban battle. At the same time, the Lebanese group Hezbollah has reportedly purchased Russian anti-aircraft missiles from the Wagner Group, a Putin-backed mercenary organization. As a result, there is still likelihood of further escalation in the region which will keep precious metals supported. US interest rates have remained weak following this week’s Fed meeting which is another supportive force. Although silver was up overnight, it gave back most of its gains by the end of the session. With October PMI’s coming in weak, silver has been unable to hold above its 50-day moving average.
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