Gold/silver/copper: the three trillion-dollar "super-cycle"
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
It is no surprise that copper prices have soared +86% since the March 2020 bottom, fueled by the steady recovery in global economies. However, once the three trillion-dollar infrastructure bill makes its way into the economy, the demand prospects could be significantly greater than previous expectations, where any supply disruptions could trigger shortage concerns. Use significant pullbacks as potential core asset "buying opportunities" for a global supply deficit projected into the coming years. If you would like to be up to date on the developments of our specific strategies in the futures and commodities markets, please register for a Free two-week trial by clicking on the link here: The Blue Line Express Two-Week Free Trial Sign up.
Gold and Silver whipsawed dramatically this week as headlines pushed and pulled both camps. Deflation fears on lockdowns have weighed on precious metals this week, and the expiration of April options created further suppression. Thursday, 1100 contracts at the $25 strike in Silver essentially settled worthless. However, the impact of the ongoing geopolitical conflict in the Middle East could spark a geopolitical premium. Thursday, Iran fired missiles at an Israeli ship, and we believe this accounted for the rip in Gold to a high of 1744. Overnight, Houthis again attacked Saudi Oil sites. Rising tensions coupled with the Core PCE index Friday morning at 1.4%, exuding no inflation by the Fed's metrics, will bring continued support into the weekend. Still, the two major headwinds are rising rates and a strong U.S. Dollar.
Technicals: Gold has major three-star support at 1719.8-1723.3 and is again building from the level. Our momentum indicator comes in at 1727, and steady action above is favorable ahead of the weekend. Silver is battling at our 25.10 momentum indicator this morning and needs a close above 25.30 to encourage added relief but has its work cut out before beginning to repair this week's damage. We created a guide that will provide you with all the Technical analysis steps to create an actionable plan used as a foundation for entering and exiting the market. You can request yours here: 5-Step Technical Analysis Guide to Gold.