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Significant Volatility Expected


While the gold market is certainly overbought from the low to high October rally of $180, flight to quality uncertainty looks to entrench in the marketplace with the prospects of a ground war keeping the region and the world anxious. However, the markets have partially embraced potential for diplomatic efforts despite the failure of such efforts early last week. On the other hand, given increased airstrikes, widespread expectations of a ground offensive by Israel and violence around the world, the prospect of a broadening of the conflict is rising. Fortunately for gold bulls, the dollar seems to be missing out on flight to quality buying interest despite surging implied treasury yields. Therefore, the biggest threat to gold and silver bulls might be higher US treasury yields as the latest breakout up in 30-year treasury yields is prompting slowing fear at the Fed and by many economists. In conclusion, the gold and silver trade are likely to see significant volatility with gold remaining the leadership market and silver at times vulnerable because of its physical commodity market standing. In fact, while there is an avalanche of global scheduled data this week, with PMIs dominating, we see gold and silver almost exclusively focused on the Middle East and perhaps at times on Treasury yields.

half gold and silver bar


The path of least resistance is down in the copper with December copper overnight posting a new low and the lowest trade since 2022. While aggressive purchases of aluminum by China on a year over year basis helps support copper Chinese economic news neutral at best. Unfortunately for the bull camp, the International Copper Study Group pegged the global refined copper deficit at 33,000 tonnes in August which is only 3,000 tonnes larger than the deficit in July. Furthermore, the International Copper Study Group forecasts a significant jump in copper supplies next year with their last estimate projecting a 2024 surplus of more than 470,000 metric tonnes.


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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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