Written Commentary
COPPER
Even though the copper market is likely drafting some lift from the noted strength in industrial commodities like precious metal markets and energies, the trade is likely drafting ongoing support from the Chinese copper smelting industry move to reduce capacity and from the recent sign of improvement in the Chinese economy. The copper market is likely drafting a small measure of lift from an increase in daily per Chinese capita spending jumping 54% in March from February. However, it should be noted that Shanghai copper warehouse stocks have increased in 14 of the last 15 weeks and are currently at the highest level since April 2020. Another threat to the bull camp and a likely precursor to significant volatility is the latest positioning report reading in copper which posted a net spec and fund long of 30,269 contracts.
GOLD & SILVER
While the gold and silver markets exhibited significant two-sided volatility at the end of last week, the bull trend has clearly prevailed and is managing that action despite adversity from the dollar and interest rates. However, a small portion of the upside impetus is likely the failed Middle East peace talks undertaken by Egypt. It appears that gold and silver ETF holdings have started to climb with the flat price of gold in a potential beginning of the end of the rally. Unfortunately for the bull camp, gold is becoming classically overbought from various technical measures with the net spec and fund long in the positioning report registering the largest long since April 2021. However, if adjusted for the $54 in gains since the positioning report was measured, the net long is obviously understated. Similarly, the net spec and fund long position in silver is overdone with the reading last week the highest since March 2022. Furthermore, with the post COT report rally of $1.55, silver is probably the longest since May 2021.
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.
