Written Commentary
GOLD & SILVER
While the trade remains vulnerable to additional stop loss selling today from a very large net spec and fund positioning, further extraction of war premium is also expected with the gold futures and options positioning likely at three year highs. However, Bloomberg overnight carried a story suggesting a large portion of the gold rally was sparked by aggressive buying at the Shanghai futures exchange. Certainly, regular Chinese investors added to record gold run with large Chinese gold premiums not discouraging interest. Bloomberg bases the bullish Chinese influence on gold prices from the jump in gold futures trading volume in Shanghai. Overnight gold ETF holdings fell by a notable 71,692 ounces and are now 5% lower year-to-date. On the other hand, silver ETF holdings rebounded with nearly 10 million ounces of purchases yesterday erasing a portion of the 30 million ounces which exited over the prior seven trading days. Therefore, it is possible that some investors saw the hard break this week in silver as a buying opportunity. Using the oil market as a measure of concern toward the Middle East, bullish interest in oil prices peaked on April 12th, which suggests the gold market into the low yesterday had very large portion of the war premium extracted.
COPPER
While the copper market damaged its charts again yesterday, the ability to recoil from early lows and given early positive trade this morning that could signal declining interest in attacking the short side and perhaps it is a sign of bargain hunting buying. Cushioning copper prices is a decline in March copper production at Poland’s KGHM, with March output at 61,700 tonnes which is 2,700 lower than last year. From a technical perspective, the copper market was significantly overbought from the explosive April rally which likely resulted in the largest net spec and fund long since early 2021.
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