Written Commentary
COPPER
With copper prices surging above $3.00 overnight the market appears to be capable of looking beyond near-term setbacks in US/Chinese trade relations and instead the trade sees a bullish global supply and demand condition. With London analysts talking about LME copper stocks at the lowest level in 13 years, China’s decline in refined copper output, a reduction in refined copper production at Rio Tinto and China offering up yet another scrap copper import quota, the classic fundamental case is decidedly bullish. In fact, overnight analysts suggested that even with most of the world mired in slow economic conditions, the recovering demand in China might be enough to continue to lift all base metals prices.
GOLD / SILVER
Weakness in gold and silver prices started in India overnight with buyers there indicating prices were expensive and that action was followed by a lower gold close in Hong Kong. Going forward the trade is likely to see some speculative buying this morning in anticipation of dovish Federal Reserve dialogue from their last meeting which will likely be accompanied by promises of action if data warrants. In another indirect but potential major support for gold and silver, the financial press is beginning to dwell on the prospect of significant additional dollar weakness.
PLATINUM / PALLADIUM
Not surprisingly, the palladium market is showing corrective action along with gold and silver to start today. The slight derailment of US/Chinese trade relations following the cancellation of talks clearly undermines demand hope for palladium from improvement in Chinese auto catalyst demand. The platinum market did forge a 5-day high early yesterday but was unable to hold that rally attempt in a fashion that suggests the market still lacks a strong bullish following. Going forward, the platinum market should derive some support from an upward revision in a Citi 2020 platinum price forecast from $834 up to $899 and also from a UBS forecast calling for $1,100 in 2021.
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.
