Written Commentary
PRECIOUS METALS
Gold and Silver
With a measure of divergence (gold holding up better than silver) we see a lack of definitive bullish sentiment toward precious metal markets. It should be noted that the sharp rally in gold last week was reportedly the result of a “flight to quality” event which has been a rare occasion in gold for several years. In our opinion, the significant recovery in December gold last Thursday was based on suspicious fundamental reasoning with the trade interpreting comments from the US Federal Reserve Chairman as a signal the Fed would not hike rates this month.
With gold and silver not showing sustained flight to quality interest beyond last Thursday’s event, gold prices basically tracking sideways over the last four weeks and open interest falling off slightly it does not appear as if a buying wave is poised to enter the market.
BASE METALS
Copper:
The copper trade should be somewhat disappointed in this morning’s minimal gains following a generally positive series of favorable Chinese economic reports released overnight. In fact, Chinese GDP ticked higher, industrial production came in stronger-than-expected and retail sales nearly doubled the gains posted in the prior month. However, the copper trade has started to consider US tariffs may not be implemented and that in turn has prompted many traders to ponder just how large of a break could prices forge if tariffs are put on the shelf. Given significant geopolitical turmoil and supply side issues over the last year, it is difficult to determine what the “tariff premium” is in copper prices.
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.
