Written Commentary
COPPER
Copper prices have retraced most of their late January recovery move as they continue to be pressured by near-term demand concerns in China and the US. March copper reached a 2-week low before finishing Monday with a third daily loss in a row and has fallen back from early highs this morning. LME copper stocks reached their lowest levels since mid-September with a tenth daily decline in a row, and that has helped to keep further losses in check early this week. Peru’s Energy and Mines Ministry said that their nation’s 2023 copper production came in at 2.76 million tonnes which was 12.7% above their 2022 output total and a record high production total.
GOLD / SILVER
The sharp rally in the dollar has clearly undermined support for the precious metals, along with the break in Treasury prices. Fed Chair Powell’s comments on 60 Minutes put to rest any ideas that the Fed would consider cutting rates in March, and this sparked a breakout rally in the dollar to its highest level since November 14. Further pressure came from a US Services PMI reading of 52.5 in January, because while this was down from a preliminary reading of 52.9, it was still the strongest it had been in seven months. Investor interest in gold continues to soften with gold holdings falling for the 13th straight day yesterday, the longest streak since September 21st. Silver ETF holdings fell for the 8th straight day yesterday and the largest single day drop since November 29th. The potential for a widening of the Middle East war could provide some safe-haven buying, but so far that support has been elusive. The PBOC plans to boost liquidity ahead of the Lunar New Year holiday to avoid a squeeze on supply as people withdraw money to cover travel expenses. Silver is facing the same fate as gold, but it has the added uncertainty about industrial demand that comes with China’s economic condition.
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