GoDubai
  
  
  
  
Citylife > Press Release
  Home Contact us Add to Favourites
Most Recent Postings
More Press Releses
Featured Sections

Event Finder
A daily roundup of exhibitions, promotions and other events in Dubai and the rest of the Emirates.
Submit an Event
Latest Dubai Press Releases >>

 
  Share

Dubai, United Arab Emirates, May 13, 2020: 

 

Market update: Copper and silver focus
By Ole Hansen, Head of Commodity Strategy, Saxo Bank
Industrial metals such as copper started the week on a firm footing, reaching a seven-week high, before retracing lower. Silver meanwhile has followed more or less the same recovery trajectory since hitting a multi-year low in March. We take a closer look at the current drivers impacting both metals and what may lie in store over the coming weeks

What is our trading focus?
COPPERUSJUL20 - HG Copper
SILVERJUL20 - Silver
XAUXAG - Spot Gold-silver ratio


Industrial metals such as copper started the week on a firm footing, reaching a seven-week high, before retracing lower. Just like crude oil and growth and dependent commodities it has now established an uptrend with rising prices as easing lock-downs support a pickup in demand. Adding to this multiple initiatives from governments and central banks have all helped improved the sentiment among growth dependent commodities. This despite facing the biggest slump in global growth and rise in  unemployment since the great depression.


Also supporting metals are reports from Chinese research hoses that commodity traders are hoarding tangible assets. Metal companies got cheap COVID-19 loans from banks and they seem to have piled that money into commodities, betting on a price recovery that is more profitable than their production activities.
Last week the war of words or COVID-16 blame game between the U.S. and China temporarily saw the off-shore Chinese Renminbi (Yuan) spike to 7.15 before easing to the current 7.10 level. Whether the hoarding is also driven by speculation about a weaker currency or other economic developments remains unclear. This emerging behavior has to a certain extent been supported by the recent price action which has seen demand for some metals being stronger during Asian trading hours. 


HG Copper reached an eight-week high on Monday at $2.43/lb before running out of steam. News from China remains encouraging with PBOC promising to do more to support the economy together with a recent drop in inventories monitored by the Shanghai Futures Exchange. The outlook however in our opinion remains one of caution. Rising supply from the reopening of virus hit mining operations raising the question whether the pickup in demand, especially from Chinese manufacturers will be enough to avoid a build in surplus stocks this year.
 
Source: Saxo Bank
With this in mind we remain skeptical that HG Copper will be able to mount a sustained rally above key resistance at $2.50/lb, an area that provided support for three years before the March break and collapse to $2/lb. Hedge funds have held a net-short position since January when the COVID-19 outbreak became known outside of China. Continued strength will attract additional short-covering but with the macro economic outlook being challenged, a sustained technical breakout is required for a long position to emerge.

 
Silver meanwhile has enjoyed the tailwind from the rally among industrial metals. Having reached a historic discount to gold on March 18 at 127 ounces of silver per ounce of gold, the semi-precious metal has since recovered to 110, the lower end of the established range. The technical set-up following last weeks price action looks promising with the gold-silver ratio pointing lower while silver has made an attempt to break a recently established downtrend.


In terms of investment flows there has been a major divergence between tactical trading firms like most Hedge funds and longer term investors, both retail and institutional, using exchange-traded funds backed by silver. The Commitments of Traders report covering the week to May 5 showed that hedge funds, spooked by the near 40% collapse from February to mid-March, have now cut bullish bets on silver by 85% since February to an 11-month low. Apart from a small dip in March, ETF investors have been continued buyers of silver ETFs since January. Total holdings have reached a record 21,000 tons.


At this stage it is still too early to conclude that silver has gotten enough momentum to capture more of the lost ground, both against the dollar and against gold. For that to happen the metal first needs to break below 109 on the XAUXAG ratio and/or above $16.15/oz on SILVERJUL20, the April high and the 61,8% retracement of the February to March sell-off.



Posted by : GoDubai Editorial Team
Viewed 2210 times
Posted on : Wednesday, May 13, 2020  
Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of GoDubai.com.
Previous Story : Arab Bank Group Reports First Quarter 2020 Net Profit of $147.6 Million
Next Story : Ajman Finance Department Awarded Payment Card Industry Data Security Standard Certification for its ...
Email this article Print this article

Share this article with your friends and followers
NewsVine

Comments

Back to Top  
Most Viewed Press Release posted in the last 7 days
Make Up for Ever Introduces for the First Time Its New Active Care-in-foundation...
Olay Eyes Hydra Gel
COVID-19 Triggers Marked Decline in Global Trade: UNCTAD
LG Prioritizes Home Comfort With Latest Air Conditioners for GCC Market
Ralph Lauren Expands Its Earth Polo Offering, Reinforces Commitment to Protectin...
6 Steps X 6 Products from Essence: The Shortcut that Perfects Skin - Now more th...
Maillon De Cartier Watch
Dynabook Refreshes Portégé X Series With Latest Intel® Core™ Processors and Priv...
Kristina Fidelskaya A/W 2020 Collection “Dream”
Vatika Focuses on Making Quarantine a Quality Time With New Viral Campaign
Union Coop: AED 46 Million Project in Umm Al Quwain
Your at-Home Spa Guide With Skin Republic
Ashley Graham for Marina Rinaldi – Ss 20
Emirates Resumes Passenger Flights to 9 Destinations, including Connections betw...
Dubai Sports Council Thanks Wise Leadership for Its Protection and Care of the C...
Don't Make A Slow Recovery More Difficult with Quarantine Measures
Dubai Customs: Strategic Plan to Curb Corona
Happy Eid with Parmigiani Fleurier Toric Fleur
Smart Cooking to Save Time With Lg Appliances This Ramadan
Sony Middle East & Africa Launches New Compact 4K Handycam® Camcorder with Advan...
Paying the Ransom Doubles Cost of Recovering from a Ransomware Attack, According...
Medcare Women & Children Hospital Offers Peace of Mind to Families and Mums-to-B...
Al Zahia Supports Underprivileged Families With Electronic Tablets for Remote Le...
Game for Anything: the All-New Toyota C-HR Lands in the UAE With Unmissable Dist...
BSH Middle East FZE Stands in Support with the Dubai Health Authority Amidst COV...
Saxo Bank Market update: Copper and Silver Focus
Aviation Tops the Agenda at ATM Virtual
Dubai Customs Launches Virtual Assessment Center During Outbreak
Etihad Holidays to Be Operated by Dnata Travel Group In the UK
Mohap Hails Family Doctors' Efforts in Countering Covid-19 Crisis
Euronews Speaks To Dubai Businesses Adapting to Support Global Needs Due to COVI...
Pure Health Launches Covid-19 Field Laboratory at Sharjah Expo Centre
Instagram Partners with TBWA Raad and Egyptian Food Bank to #Stopfoodwaste
Celebrate Father's Day With Parmigiani Fleurier Tondagraph Slate
Denim Culture
Positive Glimpses of Prayer and Fond Memories Win Xposure #homecaptured Global C...
ICBA Launches New Community Initiative on Zayed Humanitarian Day
Emirates Post Launches ‘Epostcard' to Connect Friends and Families
Abu Dhabi University Creates Face Shield Prototype to Support the Local Healthca...
Lenovo's Tech Gift Guide
du Customers Benefitting From the Fastest Fixed Broadband Services in the Gulf Region
Arab Bank Group Reports First Quarter 2020 Net Profit of $147.6 Million
Hospital to Organize a Live Session on Managing Hypertension During Pandemic
Al Wahda Mall is Now Open for Its Customers in Compliance With the Health and Sa...
Commodity Weekly: Gold and Silver Pop as Economic Clouds Darken
A Unique MC20 Prototype Dedicated to Sir Stirling Moss Testing of the Trident's ...
Etihad Guest Rewards Members While Staying Home
UAE Banks Among Top Performing in GCC, KPMG Report Finds
Reduced Demand for Global Oil Supply May Be Permanent
Dubai Customs and Spanish counterpart convene by video conference on trade and c...