Written Commentary
PRECIOUS METALS
Gold & Silver:
The bull camp could not have written a more powerful bullish script than an attack of a key oil producer, especially with Iran attacking neighboring countries in an apparent attempt to widen the conflict or spark global ire against the US and Israel. Clearly, gold and silver are undeterred by the sharp range up move in the dollar overnight perhaps because of the sharp decline in global interest rates and the prospects of a major disruption of global oil flow. In fact, with crude oil at the highs overnight trading $7.33 higher and some global equity markets off by as much as 3%, flight to quality buying of gold and silver is likely to extend straight away. Also adding into the bull case is a previously entrenched bullish psychology that resulted in a well-defined February uptrend in gold. Furthermore, with the most recent COT report showing the net spec and fund long in gold (as of last Tuesday) at the lowest level since the first quarter of 2024, the gold market retains significant speculative buying capacity.
BASE METALS
Copper:
Not surprisingly the copper market has not forged a “higher high” in the early action today as global economic sentiment is injured by fighting in the Middle East. However, copper prices are also confronted with a building wall of bearish fundamental news in the form of “proof” of exploding world refined copper supply in exchange warehouses. In addition to the historic weekly rise in Shanghai copper warehouse stocks last week of 43.7%, LME copper warehouse stocks this morning posted a jump of 3975 tons and overall exchange supplies have seen the most compacted build up in history. While aluminum prices are exploding off ideas of surging demand from the war, the lack of upside action in copper highlights a lack of definitive bullish demand view in the copper trade. On the other hand, the long term uptrend in copper won’t die easily given news that Chilean copper production in January declined by 3% and by news that US copper imports surged in December with a 200,000 metric ton tally. However, 2025 US copper imports exploded creating a massive supply surplus relative to “domestic demand”.
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