Written Commentary
GOLD & SILVER
While the dollar has retrenched from a fresh spike up new high for the move this morning, the bias in the dollar remains up to start today. However, soft US housing data could provide a brief respite from the strong dollar for gold and silver longs this morning. Unfortunately for the bull camp, gold and silver ETF holdings continue to decline highlighting a lack of small investor interest in one niche of the metal markets. On the other hand, Citi has doubled down on its bullish gold price forecast projecting gold to reach $3000 in the next 6 to 18 months. On the one hand, gold traders should be very disappointed in the lack of significant gains yesterday following news that a sovereign nation in the Middle East had attacked another sovereign country in the Middle East. On the other hand, the dollar remains strong and US interest rates continue to climb which leaves outside market headwinds in place. However, both gold and silver prices managed to rise last week against severe outside market adversity and could recover this week especially if gold consistently respects building consolidation low support around $2350. Other limiting developments from yesterday’s trade is news that the Turkish treasury has offered gold backed bonds and other Gold backed instruments which in a way suggests one Central bank sees current gold prices as expensive.
COPPER
Not surprisingly, the copper market has expended daily trading volatility following a massive first half of April rally off ideas that Chinese copper demand will begin to improve in the months ahead. Unfortunately for the bull camp, overnight Chinese economic data rekindles concerns of slowing and should temper Chinese copper demand hopes. The most discouraging reading overnight was March industrial production which nearly halved from the pace in February, while Chinese retail sales for March were very disappointing relative to expectations and relative to the previous month. In what can be a sign of a top, the Shanghai futures exchange is raising margins for copper hedging and has expended trading limits to 7%. The latest range up move into new high territory in copper continues to confound the bear camp. In fact, the market has discounted an unrelenting inflow to Shanghai copper warehouse stocks, disappointing Chinese economic news, and predictions that Chile’s main copper producer (Codelco) expects its copper production to recover this year.
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