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Focus of Gold & Silver Shifted To the $

GOLD & SILVER

Predicting the reaction in gold and silver to today’s US payroll report is difficult as the precious metal trade this week has periodically delinking with key outside market drivers in place over the prior two months. Recently, the focus of gold and silver has shifted primarily to the dollar with US treasury rates a secondary and inconsistent influence. Pushed into the market, we favor the bear track with the aggressive blowoff reversal and a follow-through slide in gold and silver prices this week threatening the bull camp. While it may take a strong dollar reaction to US jobs today to throw gold and silver out of the recent consolidation to the downside that would likely be the case if payrolls come in closer to 200,000 than 180,000. Furthermore, short-term technical indicators remain in sell mode, investors continue to liquidate ETF holdings and the fear of global slowing has not reached a level which creates uncertainty and anxiety. Other technical negative presented to the gold trade today is the potential for an end of four weekly gains in a row which clearly shows the bull camp is losing its primary bullish catalyst. Nonetheless, a stronger-than-expected result from nonfarm payrolls combined with an upward revision from the prior month could throw gold into a significant setback potentially testing $2000 in the coming sessions.

Gold Bars and US Currency

COPPER

We suspect a portion of strength in the copper market this morning is the result of classic short covering from a compacted selloff earlier this week but a 4193-ton inflow to Shanghai warehouse stocks this week should dampen bullish sentiment. However, Chinese officials have launched a chorus of pledges to support their economy and some traders saw the jump in copper and iron ore imports yesterday as a sign that the slowing in China might have abated. In fact, the Chinese president overnight indicated that the recovery in China is at a critical stage which would seem to open the potential for China getting beyond its stubborn slowdown caused unending Covid isolation. Short-term technical signals remain in sell mode but a definitive risk on vibe following US jobs this week’s double low support at $3.7290 might fail to hold.

 

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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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