Written Commentary
GOLD & SILVER
The bias in gold remains up despite negative divergence with silver prices and news of continued outflows from gold and silver ETF holdings. However, yesterday gold impressively managed gains despite another significant extension of upside action in the dollar and in the face of another higher high in US treasury yields. Certainly, the gold market fell initially yesterday morning as US interest rate cut hopes were pushed even lower following a Fed speech indicating US rates would remain higher for longer. In fact, with the gold market rejecting weakness from hawkish Fed dialogue and recovering in the face of noted silver weakness, the bear camp in gold should remain off balance. In a minimally supportive classic fundamental supply development, Barrick Gold posted lower than expected first-quarter gold production and that sent shares of the Canadian gold miner down 6% which is very surprising considering gold prices remain near all-time highs. In the end, geopolitical risks are likely to continue to lift gold prices which have managed a sustained uptrend in the face of a very disappointing slide in Bitcoin.
COPPER
With a recovery in copper this morning and the markets maintaining a pattern of higher lows, the negative supply and demand news from yesterday has been discounted. In fact, the market is refocused away from yesterday’s bearish supply news toward bullish supply news after learning the number one Chilean copper miner posted an output decline of 11% versus year ago levels! In our opinion, the copper market deserved aggressive liquidation given the disappointing flow of Chinese economic data and what was likely the largest (adjusted into the high yesterday) net spec and fund long position since the beginning of the pandemic era. However, Chinese copper demand concerns were not the only catalyst behind the setback in copper prices yesterday as Peru copper production in February reportedly jumped by 12.7%.
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