Copper

Can silver and copper hold their ground, or are sharper declines on the horizon? The price action suggests a resumption of the bearish trend could be in the cards.

Traders are eyeing China’s stimulus announcement on Friday. Will it be substantial enough to counter weak growth and Trump’s looming 60% tariffs? The market reaction for USD/CNH, iron ore and copper hinges on the detail.

Iron ore, copper and silver, along with the Australian dollar, were among the markets hardest hit by China’s latest stimulus announcement, falling heavily as it became clear the objective of policymakers is to stablise growth, not see it accelerate meaningfully as seen in other state interventions of the past. The “bazooka” many headlines and bullish narratives were based upon ended up being yet another peashooter.

Cyclical asset classes have performed well recently, benefitting not only from ongoing hopes for a soft landing for the global economy but also expectations for substantially lower interest rates and a weaker US dollar. But what if markets, collectively, are wrong about the outlook again like were at the start of the year? We look at the implications for the Dow Jones Industrial Average, copper, crude oil and the Aussie dollar.

We’ve seen plenty of short squeezes before that have quickly run out off puff. But with speculation swirling that policymakers may follow up Tuesday’s monetary policy easing with fiscal stimulus ahead of Golden Week holidays, that alone may be enough to promote further gains in the days ahead.

Gold, silver and copper were dragged lower with appetite for risk on Tuesday, although it may be the latter two which show the greater potential for bears going forward.

COMEX copper is one of the most interesting charts out there right now, providing something for bulls and bears depending on how the near-term price action evolves. Whichever way the price breaks, you get the feeling the move could easily extend, potentially providing decent trade opportunities for those with a little patience.

Bond traders are stepping back into the market on bets that the Fed will deliver a dovish hold today, which weighed on the US dollar and supported gold, silver and copper ahead of today’s FOMC meeting.

Given significant uncertainty towards the demand outlook, it may be preferable to let the price action tell us what to do rather than pre-empt on fundamental grounds.

Concerns over China and a hot labour market report in the US caused metals to fall sharply. However, the long-term gold forecast remains positive despite the recent struggles, even if prices were to weaken further in the short-term outlook.

China’s services sector strengthened in May, boosting Chinese equity markets and providing some respite for commodities such as copper and WTI crude oil.

It’s been a wild ride for commodities in May with many names who started the month in beast mode ending it with a whimper. Some have broken down technically while others are threatening to do so. Ahead of inflation data from the United States, Eurozone and Japan on Friday, we look at messaging from the charts for gold, silver and copper.

Gold and copper have made mild attempt to recoup last week's losses, which puts us on alert for a potential 'dead cat bounce'. Whilst silver’s rebound has been much more impressive, resistance looms.

The rout in commodity prices didn’t last long, as expected, with dip buyers emerging late last week to take advantage of better entry levels. Crude and copper look particularly constructive following the recent bounce.

Metals markets finally succumbed to the higher rates, stronger US dollar environment on Wednesday, with vulnerabilities evident earlier in the week finally materialising. But the underlying factors behind the rally have not gone away, making us inclined to continue buying dips.

Asset managers reached a record level of net-short exposure to VIX futures, days before prices fell to a record low. Traders also remain net-long USD despite losses in recent weeks.

The upside in copper flagged last week has played out nicely, delivering a fresh contract high for the red metal on COMEX futures. However, the price action over the latter parts of this week has not been convincing, warning of growing near-term downside risk.