Written Commentary
GOLD / SILVER
With a higher high for the move overnight, April gold has extended a slight bullish edge into another trading session. Surprisingly April gold managed the higher high despite a measure of strength in the dollar. However, a very minor and indirect negative impact on gold overnight came from a very hot New Zealand producer price index reading which for some keeps fear of global inflation in place. In today’s early action, traders will be confronted with a US Fed speech, a 20-year US treasury bond auction, and perhaps most importantly the release of the FOMC meeting minutes from the Fed’s most recent meeting. Given the general trend of commentary from Fed members, micro scrutiny of US CPI and PPI readings last week, and soft but not concerning US data, traders should expect the Fed to lower market expectations of a rate cut for the next two meetings. However, the 20-year bond auction at midsession could undermine gold, especially after implied treasury yields yesterday reached the highest levels since December 4th.
COPPER
Apparently, the copper trade sees recent upbeat Chinese economic signals (road traffic, increased vacationing, major assistance for the mortgage market, and strong jet fuel consumption) as a sign Chinese copper consumption is set to improve. Furthermore, Goldman Sachs thinks Fed easing will provide a major lift to copper and gold prices, with lesser lift seen in petroleum markets. However, the timing of US Fed easing is clearly slipping into future with the copper market likely taking most of its direction from Chinese centric news. In a potential major threat to the bull camp, the US FBI director this week warned of aggressive Chinese and Russian hacking attacks which could trip up global economic sentiment or perhaps result in Chinese sanctions. Fortunately for the bull camp, LME copper warehouse stocks continue to decline with declines in 20 of the last 21 days and overall stocks at the lowest level since September 6th.
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