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Bias Shifts Up for Gold & Silver


The technical and fundamental bias has shifted up for gold and silver following the latest update on the status of US Fed policy. Obviously, the idea that the Fed will be on-hold in the December 13th meeting, the downside breakout in US treasury yields today, the definitive reversal/gap down slide in the dollar early this morning gives the edge to the bull camps in gold and silver. However, the initial gains are somewhat disappointing given the noted favorable shift in market psychology, especially with the potential for the war to provide out of nowhere buying. Perhaps gold is held back this morning by a 3rd quarter jump in Barrick gold production of 60,000 ounces but that was partially offset by a 3% decline in production from Sibanye Stillwater in their third quarter. While the bias is up, US initial claims readings this morning are likely to have a temporary impact on prices as the current market view is US rates are on hold or have peaked. However, unless the US initial claims post a new low for the year a shift back to higher rate action in Treasuries and a recovery in the dollar is unlikely. Silver prices had a wild ride yesterday after the lower-than-expected ISM had many investors questioning implied demand for metals.


With China usually the 800-pound gorilla in the copper market, seeing improved macroeconomic views from the US is not likely to yield definitive upside action. However, LME copper warehouse stocks declined for the 9th straight session yesterday and the unfolding pattern of declines in LME copper warehouse stocks should at some point rekindle global supply tightness dialogue. The LME copper warehouse stocks decline this morning creates the longest streak of consecutive declines since February, with those stocks falling to four-week lows. Unfortunately for the bull camp Chinese equity markets this week have declined in the face of gains in global equity markets with the last three Chinese scheduled data reports signaling a struggling economy. Clearly, the futures markets yesterday were not lifted by a Reuters poll released yesterday projecting 2024 copper prices to manage a 7% gain over 2023 which we think indicates bullish malaise. Yet another sign of a bearishness in the market is the copper’s failure to rally off a US rate hike pause and an upgrade of the US economy from the Federal Reserve.

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Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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