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Gold & Silver Resistance to Thicken


While we don’t expect to see a significant gold and silver price reactions to today’s US jobs related data, a higher high in the dollar early on, slightly higher US interest rates and a series of lower highs and lower lows in gold this week leaves the bear camp with an edge. On the other hand, the trade is expecting a slight increase in continuing and initial jobless claims and that could provide a brief lift for prices. However, favorable Chinese trade data and a report of an improvement in the Chinese homebuyer market should provide an improvement in expectations for improved Chinese gold demand. Even though the markets will be presented with a Bank of England rate decision early today, that news is unlikely to have a major impact as the trade thinks the policymakers will simply favor lower rates in dialogue and not act. At present, without a surprise headline development, we leave the edge with the bear camp with trading ranges expected to be narrow and the expectation the lower high and lower low pattern to extend. Going forward, the dollar bulls look to extend their control which should thicken resistance in gold and silver.


While the copper trade maintains a bullish tilt from long-term structural tightness projected from industry experts, the lack of a positive reaction to improved Chinese import and export data overnight suggests the bias remains down. However, with Chinese April copper imports dropping from price shock, a slide below $4.50 in July copper is likely in the coming 36 hours of trade. Fortunately for the bull camp, Chinese January through April copper concentrate, unwrought copper and copper product imports increased year-over-year potentially discounting the April import drop as a temporary response to prices surging by more than $0.60 in the month and given copper prices at one point were $1.00 above the February low. In fact, given what could be a massively overdone net spec and fund long positioning report tomorrow afternoon, we suspect the copper market will continue to grind lower. However, LME copper warehouse stocks continued to fall with consistency but that has not been in the headlines yet. On the other hand, the cash to three-month LME copper spread reached the largest discount ever yesterday, suggesting bullish sentiment might have been overdone as of late last month.


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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.

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