Written Commentary
GOLD & SILVER
While gold and silver are tracking higher early today the charts still favor the bear camp from last week’s sharp range down failures which in turn should make the Thursday/Friday lows key pivot point pricing to start the new trading week. Adding into the negative track in gold and silver prices early today is news that Chinese April net gold imports plunged 38% from March which we think was largely the result of historically high pricing. It should also be noted that April saw the biggest compacted gains in gold prices ever with gains in silver also very significant. However, some of the reduction in Chinese gold imports was the result of a reduced import quota from the government’s attempt to counter weakness in the yuan. The focus of the trade this week will be inflation data from the US at the end of the week especially with the pendulum of prospects of softer US Fed policy plunging last week and in turn providing support to the dollar.
COPPER
While the net spec and fund long position in copper has come down considerably from the COT report mark off date, the net spec and fund long was at the highest level since early 2021. However, from the positioning report into the recent low July copper prices fell by $0.34, thereby balancing the overbought condition modestly. The copper market should see support from news that Chinese smelters achieved near record output in their latest monthly results as that can indicate increased economic activity or in managed economies could mean the government has directed higher output. However, the Chinese smelters are reportedly turning heavily to scrap thereby avoiding/mitigating a portion of the significant run up in raw ore pricing.
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