Written Commentary
Base Metals
Copper: Copper prices fell as a slightly firmer dollar and broader macro concerns weighed on prices. Benchmark three-month copper on the LME was down 0.5% at $10,802. There is little change regarding narrative on copper, with markets eyeing upcoming data out of the US for clues on Fed direction and for signs of economic activity. Sentiment has recently been weighed down by disappointing data out of China, where recent industrial data has been uninspiring even as major infrastructure and green energy investments support long-term demand. Speculation has been growing that Beijing will target the copper refining industry in its drive to reduce overcapacity, following calls from China’s nonferrous metals association for tighter oversight of new smelting projects. The cash LME copper contract last traded at an $18-a-ton discount to the three-month forward, indicating no pressing need for short-term metal.
Zinc: Zinc was up 0.1% to $3,023. The zinc cash contract is seeing a $208 premium, underscoring supply tightness amid low LME stocks of less than 40,000 tons.
Aluminum: Aluminum fell 0.9% to $2,833.
Tin: Tin slipped 0.1% to $36,750.
Lead: Lead dropped 0.7% to $2,050.
Nickel: Nickel shed 1% to $14,740.
Precious Metals
Gold: Gold prices moved lower in muted activity as investors await clues on Fed policy ahead of a delayed September jobs report due on Thursday, while PMI data due Friday will also shine some light on current economic conditions. Fed Funds futures are showing less than a 50% chance of a September rate cut from the Fed, down significantly from just over a month ago, as several Fed officials have voiced concerns for cutting rates in December. September’s report will likely stir volatility, although it will come up short of being reflective of the state of the labor market given that the report is two months old. Accurate and reflective figures likely will not come until early January, when December’s report is due, and those figures could also be distorted due to the shutdown as well.
The Fed will also publish its meeting minutes from October on Wednesday, which could offer clues regarding how many members would support a rate cut in December. Markets will continue to look to private figures for clues to the state of the US economy. S&P PMI data out Friday is likely to gain attention, especially in regard to its employment and prices indexes, after ISM’s PMI data had suggested that labor market conditions remain weak and price pressures, specifically in the services sector, remain elevated.
The long-term outlook for gold will remain supported by continued central bank purchasing.
Silver: Silver futures fell 0.6% to $50.38.
Platinum: Platinum is 1% lower at $1,549.
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.
