Written Commentary
COPPER
Despite ongoing very bullish Goldman views toward copper, the market is tracking lower this morning. In fact, Goldman analysts indicated the world copper market could see a “stock out episode” with global inventories in the fourth running extreme low. The market is also not benefiting from bullish intermediate and long-term industry forecasts from mining giant Antofagasta. However, the trade did see fresh bearish supply side news from Indonesia where the government is expected to extend export licenses for copper concentrate even though the actual volumes are yet to be determined. In another supportive development for long-term bull views another mining executive yesterday suggested mergers and acquisitions within the copper space would not cure the looming shortage. Even though the copper market has benefited from extensive speculation of long-term tightening of global supplies, the bull camp was given an added boost yesterday following comments from a famed investor/manager suggesting world supplies of copper will become very tight in the future. Furthermore, LME copper warehouse stocks continue to fall at a brisk pace and are beginning to become a material supportive force.
GOLD & SILVER
With the US dollar posting a four-day high overnight and the bias shifting slightly back toward a hawkish vibe, the bias in gold and silver is down to start today. Furthermore, the gold market remains under residual pressure from news yesterday that PBOC gold buying last month slowed perhaps because of the unending record price run. However, the Peoples Bank of China extended its record of 18 straight monthly additions to reserves with a very minimal purchase of 60,000 ounces which is down 100,000 ounces from March and a very explosive 390,000 ounces below February. On the other hand, gold ETF holdings saw an unusual inflow of 39,016 ounces yesterday but year to date holdings have declined by 5.7%. The bull camp should be discouraged with the lack of strength in gold and silver prices yesterday after getting word of the beginning of the Israeli attack on a southern Gaza city. However, the attack was widely anticipated, and the US dollar was offering spillover pressure to gold, silver, and many physical commodities yesterday. Going forward, the bear camp looks to maintain an edge as flight to quality interest is apparently not waiting in the wings.
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.
