Written Commentary
GOLD & SILVER
Clearly, the bottom has fallen out of physical commodities today with gold forging a 3-day low to start the new trading week. Another fresh contract high (20 year high) in the US dollar, undying fear of higher rates, fear of slowing and most importantly an ongoing inability to embrace geopolitical flight to quality developments and that leaves the bull camp in distress. With palladium, platinum, and wheat the only physical commodities avoiding the broad-based washout this morning, more downside is expected in gold and silver, with gold likely to find some temporary support at $1,850 and July silver likely to find support quicker at $21.55.
PALLADIUM & PLATINUM
With a massive range down failure to the lowest trade since January 20th last Friday, the June palladium market might have pushed its net spec and fund short closer to the record short of 4,084 contracts. The May 3rd Commitments of Traders report showed Palladium Managed Money traders are net short 701 contracts after net selling 118 contracts. While the July platinum contract failed at critical support of $950, the market rejected a large part of a massive range down failure. Unfortunately for the bull camp, investment interest for platinum continues to be soft with ETF holdings last week the climbing by 30,317 ounces, which pushes up the year-to-date contraction to 5.5%.
COPPER
Adding into the big picture macroeconomic pressure on copper today is a 4% decline in Chinese April copper imports. However, January through April Chinese copper concentrate and ore imports were up 4.5% while January through April unwrought concentrate and ore imports increased by 0.9%. Nonetheless, Chinese copper demand fears are likely to remain in place as the zero tolerance Covid policy remains in place with only modest signs of hope flowing from Shanghai. Despite the copper market managing to throw off the initial wave of selling early last week, the market ran out of short covering fuel quickly and buyers were not interested in paying for July copper above $4.30.
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.
