Commercial traders in the metals markets appear to be taking the money they’re pulling out of the gold market and putting it to work in more industrial metals.
Copper Action
While we’ve seen upticks in their purchases of both silver and platinum over the last couple of weeks, their actions in the copper market is clearly where we should focus. Commercial copper sellers were big sellers above $3.15 per pound from the end of June through the end of July. They’re net sales of nearly 35,000 contracts in four weeks was some of the strongest selling we’ve seen. Interestingly last December was the only time in the last ten years that we’ve seen this kind of selling. The real story is in the turnaround in their actions.
Macro Signal
We’re focusing on the buy side of the copper market Monday morning because their recent buying off the lows just under $3.10 suggests a better macro tone for all markets. It appears that copper traders may be signaling an end to the global geopolitical gridlock that many fear will stifle the markets and inhibit the infra-structure growth necessary to keep global GDP progressing. That being said, the market may have gotten a bit ahead of itself last week.
Key Levels
There’s solid resistance near $3.26 per pound. You can see the trend line along with the bounce in the commercial position on this commercial copper trader chart. We expect this to contain the market long enough to provide a pullback that we can use to initiate new long positions at more frugal prices. This means we expect commercial buying support to continue and protect Thursday’s low of$3.084. We’ll watch the market anxiously this week as it could be choppy due to shifting commercial sentiment.
