Gold/Silver: Chinese Copper Demand Becomes “Tit for Tat” Metals Minute

Overnight, the Precious Metals are “slightly weaker” after yesterday’s “Consolidating” session. Interestingly, Gold, Silver, Platinum, and Copper could not extend their gains, while aluminum and palladium rallied. 

 What could be happening is that we are defining a “new trading range” with $2,450 as a new resistance level and $2,400 as new support. 

Today, we will see the minutes from the latest FOMC meeting and hear from Chicago Fed President Goolsbee. After the bell, we will get earnings releases from Nvidia, Synopsys, and Snowflake. For those who trade the Nasdaq and S&P, buckle up or sit back and watch. 

Despite yesterday’s metals consolidation, it is a glass half-full or half-empty scenario. Yesterday’s correction was shallow, considering volatility, while bargain hunters stepped in, focusing on long-term fundamentals. 

Copper continues to be the leader. The global copper market is expected to remain in deficit due to lower production and production cuts by Chinese smelters. I expect Copper to register a more significant deficit than expected in 2024, and that theme will worsen in 2025. 

For Example

• I’ll look for corrections as opportunities and focus on the micro contract for December and March of 2025.
• Cyclical demand continues to recover with increased demand from the green energy transition

Domestic Headlines Impacting Copper

• As spring heatwave is expected to drive demand, Texas power prices briefly soar 1600%.”
• “Here’s the latest plan for Texas to connect to the East Coast electricity grid 
• With the strain on electrical grids, headlines like that make me believe that building long-dated copper positions may be wise.

Overnight weakness in Copper comes from Chinese proposals to retaliate on imported vehicles by implementing a 25% tariff on cars with engines greater than 2.5 liters, mostly your luxury vehicles. 

S&P 500

• The FOMC Minutes are released at 1:00 P.M., and a hawkish narrative may send prices back down to initial support of 5335 while deeper support remains at 5305-5295. A possible melt-up could occur, driving prices up to 5375.

Crude/Natural Gas

• The net long positioning in oil decreased to the lowest level this year.
  • The U.S. rig count has declined to a four-month low.
• Natural Gas production continues to decline; however, a temporary top may be in the cards with a beginning of rising production.
• Reuters poll indicates that Oil stockpiles may see their third straight week of declines with expectations of a 3.1 million barrel drawdown.

Silver

• Average true range = 94 Cents = $940 on the mini, $4,700 on the large
• Support $31.25, May 17th Close, below that $30.00
• Resistance $32.50, where a close above, welcomes a new “leg higher"

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