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LME Copper Warehouse Stocks Decline

COPPER

In retrospect, the aggressive rally in copper last week and the sharp upside extension early yesterday are clearly challenged by the latest disappointing Chinese economic data release. In fact, both non-manufacturing and Manufacturing PMI data were soft yesterday, dashing hopes of a nearing recovery in the Chinese economy. Fortunately for the bull camp, daily LME copper warehouse stocks continue to decline at a notable pace, with the latest draw the eighth in a row and the longest outflow streak since late March. With Asian and European PMI’s failing to impress this morning, it is easy to see why we have had so much weakness in copper prices over the last 18-hours. Copper prices have failed to hold above their 50-day moving average, which is a bearish technical sign. At the same time the SMM copper conference in China this week predicted that copper prices won’t go up until H2:24, adding to the bearish tone. The only potentially bullish news besides a new developing pattern of declining LME Copper stocks is that the UAW actions are now ending. Traders should expect a choppy session for copper today as we have US jobs data this morning, and the Fed’s rate decision this afternoon. The DXY’s strength might be a headwind for copper, as it flirts with 4-week highs. Today’s Fed decision will determine the dollar’s direction.

copper pipes various sizes

GOLD / SILVER

After starting the week with a gap up opening, gold prices are now back to where they started, despite the Middle East conflict continuing to get messier. Yesterday saw the Israelis blow up a refugee camp where a Hamas commander was hiding. Of more importance today is the Federal Reserve’s interest rate decision and, or more importantly, wording from the statement and Fed press conference. While the gold market has displayed some bullish resiliency throughout October, a lack of incendiary developments in the Middle East and renewed strength in the US dollar initially stalled December gold again around the $2,017.70 level and ultimately prompted a wave of long profit taking yesterday. China continues to lead the buying binge with total global central bank buying this year now 800 tons.

 

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