Metals: The post Jackson Hole speech from Fed Chair Powell which signaled higher inflation tolerance and lower rates for longer, helped give both gold and silver a boost during the week to September 1. The hesitancy speculators have exhibited in precious metal futures was however on display once again. Despite rallying by 8.4%, the net long in silver remained unchanged while the gold long was increased by 9% to 151k lots. Last week’s stronger-dollar led correction has left three lower highs on gold the chart, a development that signals fading momentum and increased risk for a deeper correction as recently established longs exit the market looking for better entry levels.
Copper was a market that was left unscathed by dollar and stock market corrections last week. It quickly found support following a mini correction amid tightening supply of London Metal Exchange inventories which have slumped to the lowest since 2005. The main driver being the Chinese economy which continues to recover from the coronavirus pandemic. Speculators maintained their bullish outlook and lifted the net long in HG copper by 11% to 70k lots, the highest since June 2018. The number of contracts supporting a negative view slumped to just 20k lots, the lowest since March 2017.
Latest: Gold continues to bounce along trendline support from the March low, today at $1930, with the risk of an extension to $1900 on a break. The market has settled into a wide range while watching the dollar, real yields and stock market developments for clues about the direction. An accelerated sell-off in stocks may pose a challenge with gold and silver becoming a source of liquidity to cover margin calls and losses elsewhere