Written Commentary
COPPER
Chinese October unwrought copper imports increased by 1.1% and the general take away from all Chinese copper sector imports was favorable to demand prospects. In fact, Chinese January to October copper concentrate and raw ore imports increased by 3.2% which should mean market perceptions of for Chinese copper demand might be overstated. However, the copper market experienced significant technical damage yesterday, and trading volume jumped but does not appear to have signaled an exhausted washout. Another potential sign of further technical based selling is the slight increase in open interest yesterday as that might signal more selling interest is poised to enter the fray.
GOLD & SILVER
While the bull camp will disagree, the washout in gold and silver yesterday was not as severe as it could have been given the sea change in market conditions this week. In fact, the surge in interest rates and massive dollar gains alone justifies the magnitude of the setbacks yesterday. However, gold seeing the safe-haven argument severely damaged from the simple passing of the election. Furthermore, some clarity on the future and what has been a peaceful shift in power should also provide an ongoing measure of long liquidation. The bear camp should be emboldened by the lack of upside action this morning in gold and silver prices did not show noted strength after the interest rate cut by the Bank of England and that same reaction might be seen following the Fed cut this afternoon. The most recent gold COT positioning reports on the net spec and fund long of 316,000 with the potential for a liquidation down to 246,000 net spec and fund long contracts. Fortunately for the bull camp, gold saw a very active trading volume on the washout of 139,690 contracts but open interest only fell slightly. An indirect negative for gold and silver include the sharp surge in bitcoin interest with trading volume in bitcoin futures yesterday reaching the highest level since late October 2023. Another worrisome issue for the bull camp is a lack of consensus with respect to gold and silver ETF holdings with silver ETF holdings seeing significant demand suggesting traders are rotating from gold to silver.
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