Written Commentary
GOLD & SILVER
With the gold and silver markets spiking higher following the Fed policy decision and press conference, the bulls showed some control as the trade was able to discount disappointment over another delay in cutting rates and instead embrace relief that the Fed was not in a mode to consider rate hikes. However, given a significant jump in ISM Manufacturing prices-paid earlier this week, that should be seen as a sign that inflation lives on in various sectors of the economy. Unfortunately for the bull camp, we think that “dovish spin” will have a short shelf life, especially if today’s US unit labor costs report matches expectations of a gain of 3.2% compared to last month’s gain of 0.4%. Fortunately for the bull camp, the dollar has been unable to sustain gains from bullish developments and has displayed disappointing chart action despite two consecutive higher high moves. However, both gold and silver could see selling rekindled if today’s US unit labor costs report comes in as expected, initial claims fall near 200,000 and or nonfarm productivity weakens. In conclusion, yesterday’s recovery was a relief rally and not a reversal of the near-term trend.
COPPER
As indicated in other coverage today, the markets surprisingly managed to “shape” yesterday’s US central bank dialogue into a positive for commodities and equities by embracing relief that the Fed was not considering rate hikes. Fortunately for the bull camp, the International Copper Study Group reduced their latest copper surplus forecast and noted their ongoing long-term fear of production issues. However, fear of oversupply is still a prospect given the international Copper Study Group was still expecting a 2024 surplus of 162,000 tonnes. In a fresh and potential major bearish development, Chinese copper producers are reportedly planning to export 100,000 tonnes of copper which would likely overwhelm the world market temporarily and potentially change the paradigm of the current copper market.
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