Written Commentary
PRECIOUS METALS
Gold: Gold prices are higher but trimmed earlier gains following the release of January’s jobs report, which showed payroll growth was stronger than expected at 130,000 vs. forecasts between 66,000 – 70,000. Meanwhile, the unemployment rate edged down to 4.3% from 4.4%. The strong jobs figure all but closes the door on any chance of a March rate cut from the Fed, while odds of a June cut are no longer fully priced in. Still, markets are positioned for a rate cut in July and another cut again in December.
Investors are now looking ahead of Friday’s inflation figures, which will be fundamental in shaping the Fed policy outlook. Recent commentary from San Francisco Fed President Mary Daly suggested that policy remains well positioned to support the labor market and fight inflation, while Dallas Fed President Lorie Logan reiterated similar comments.
Structural support for gold remains intact as central banks continue to diversify reserves away from the dollar and increase bullion purchases, a trend expected to provide a steady underlying bid through 2026.
Elsewhere, China’s central bank extended its gold purchases for a 15th consecutive month in January, underscoring continued institutional demand for safe-haven assets. Geopolitical attention also remains on US–Iran negotiations, with both sides agreeing to continue discussions this week in an effort to ease tensions and avoid escalation.
Silver: Silver futures are up nearly 4% to $83.65. Silver is likely to continue to face extreme volatility in both directions in the near term. The silver, platinum and palladium markets are small relative to gold, making them vulnerable to speculative inflows. This dynamic has presented the risk that prices have become detached from physical demand conditions. Additionally, record high prices could be poised to limit industrial demand.
Platinum: Platinum is up 2% to $2,140.
BASE METALS
Copper: Copper prices are higher, with benchmark three-month copper on the LME up 2.1% to $13,383 earlier in the morning. Demand conditions have largely cooled after Chinese buyers completed their buying ahead of the Lunar New Year holiday. Analysts from Morgan Stanley said that China’s fourth-quarter copper consumption fell 12.3% year-over-year, despite a 4% rise in demand. Consumption data out of China will be on hold until March due to the Lunar New Year holiday, set to begin on February 15.
Available stocks in LME-registered warehouses jumped to 189,100 tons, their highest since May, after 4,800 tons were delivered in warehouses. LME inventories are up over 25% since January 9. Meanwhile, inventories at the SHFE climbed for the ninth-straight week to their highest level since April at 248,911 tons after months of waning supply. SHFE stocks are up 60% since December 19. Reports have been circulating that the Chinese State Reserves Bureau is releasing copper into warehouses to ease recent price spikes. COMEX stocks continue to see daily inflows and are at a record 535,430 tons.
China announced plans to boost stockpiles of copper, though several traders have cautioned against over-interpreting the remarks. Currently, there are no details on the planned size of the reserves, scale of purchases, or timeline.
Zinc: Zinc added 1.5% to $3,446.
Aluminum: Aluminum gained 1.1% to $3,125.
Tin: Tin jumped 2.4% to $50,450.
Lead: Lead edged up 0.6% to $1,985.
Nickel: Nickel was up 2.5% to $17,925.
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.
