Written Commentary
COPPER
Risk assets were mainly up overnight giving copper prices a lift. On the supply side, Glencore reported a 5% drop in copper production compared with this time last year. This comes after Anglo American dropped its copper guidance last week as well. Inventory levels in both Shanghai and at the LME dropped last week. There have been rumors this morning of a mass exodus of copper traders from Amer, China’s largest copper importer and trader. With $90.5bn in revenues Amer represents 10% of the Chinese copper market. In addition to news of stimulus from the Chinese government, copper should also be cheered by the decline in weekly Shanghai copper warehouse stocks last week of 21,815 tonnes which put those inventories at the lowest level since September 2022. But demand remains strong in China as the operating rates at copper rod plants saw a material increase last week, following the golden week holiday. The freshest concern for copper demand is the Canadian UAW strike.
GOLD / SILVER
Gold futures gapped higher this morning to new post-Hamas attack high of $2,004. Looking ahead carnage of the unrelenting Israeli air attacks and the beginning of the ground war and talk of massive casualties are likely to whip up threats and perhaps action from the Arab world, especially from Iran. Therefore, the path of least resistance remains up in gold with open interest well below the high seen in May at the peak of the 2023 rally. Uptrend channel support in December gold today is $1,997.25 initial targeting and resistance is $2,028.60 with a trade above $2,050 likely in the coming sessions. Obviously, the silver market is not tracking the same focus as gold market with last week’s pattern of lower highs suggesting it is tracking classic commodities fearful of global slowing from the economic uncertainty of war.
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