Written Commentary
GOLD & SILVER
With outside market action remaining in favor of the bear camp early today, the bull camp remains hopeful that this week’s inflation data will further revive the prospect of a US rate cut, which in turn would continue to pressure the dollar and treasury yields lower. However, the gold market is vulnerable this morning following comments from the Indian Bullion and Jewelers Association suggesting Indian wedding season demand will soften due to record pricing. Along those lines the domestic Indian gold trade has seen prices shift into a discount relative to global markets, with Chinese premiums narrowing. However, analysts suggest ongoing strength in gold prices could attract European and US spec interest, but that could indicate the frothy stage of the market is unfolding.
COPPER
Fortunately for the bull camp, Chinese equity markets bucked the overnight trend and traded higher helping May copper reject a dip below Friday’s low. In retrospect, we were not surprised to see the copper market fail to hold a new high for the move and close sharply lower Friday as a 3rd straight massive weekly inflow to Shanghai copper warehouse inventories presents a very significant and fresh threat against the recent revival of Chinese copper demand hope. Another fresh negative from the end of last week came from Peru where they projected this year’s copper output to increase from 2.76 million tonnes up to 3 million tonnes.
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