Written Commentary
BASE METALS
Copper:
While the Chinese have returned from holiday and copper prices have gained with their return, a large single day jump in LME copper warehouse stocks of 3,950 tons yesterday should provide resistance just under $6.00, especially if the trend of rising Shanghai copper stocks continues tomorrow (it is not clear if the exchange will release the stocks given the recent holiday). On the other hand, the trade has seen firming spot copper demand this week, copper mining giant KGHM is reportedly considering international investment opportunities in the copper sector and further gains in global equities should help improve demand expectations for refined copper.
PRECIOUS METALS
Gold & Silver:
While we have been skeptical of suggestions that tariff uncertainty and the potential of a looming US strike against Iran have been a major bullish force, that element certainly remains an underpin for gold and silver prices. It should be noted that the US has restarted indirect talks with Iran in Geneva, the president clearly intends to push forward with 10% tariffs from another legal path and headlines of ongoing central bank gold purchases continue to surface. In other words, bullish fundamental conditions remain in place with this week’s two-sided action balancing the overbought condition present in both gold and silver at the start of the trading week. However, in today’s action less macroeconomic uncertainty flowing from global equity market strength, weakness in oil prices and some weakness yesterday in large gold mining shares appears to be sparking long profit taking. On the other hand, the overall trend in gold and silver remains up, especially with gold and silver ETF holdings seeing large inflows in the first two trading sessions of the week.
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