Written Commentary
COPPER
In a development that should disappoint the bull camp, copper prices this morning are trading lower despite an upward revision in IMF Chinese growth forecasts for this year and next! In fact, the copper market is also discounting a bullish forecast from RBC capital markets overnight which predicted copper will stay strong through the end of this year. The copper market managed to reject a retest of the vicinity of last week’s spike low yesterday giving rise to talk of a building consolidation low zone. The trade has certainly balanced a very oversold technical condition and has reduced a portion of its massive net spec and fund long increasing the potential for a technical low. On the other hand, Chinese domestic copper stocks remain high with a gain this year of 240% on a year-over-year basis, but that is offset by very strong Chinese daily refined copper production.
GOLD & SILVER
Global equity markets overnight were lower except for the markets in Shanghai which traded fractionally higher. However, bullish fundamental information on silver, justifies silver’s recent relative strength versus gold as reports of heavy Chinese buying of international silver suggests a major demand source has emerged. Apparently, the bullish theme behind significant Chinese interest is surging demand for silver in solar energy applications. Fortunately for the bull camp, the washout last week resulted in a significant 40,000 contracts drop in gold open interest on relatively active trading as that could increase the odds of a technical low.
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