Overtime
Commodities update
Good morning,
Yesterday’s Monday Morning Playbook looked at short-term strength in gold, crude oil clinging to support, and gasoline futures making multi-month lows. But commodities have broadly been strong and we haven’t taken them into Overtime since October, so this week I’m providing a quick update on the entire landscape:
Specifically, we’ll look at:
Gold
Silver
Copper
Oil
Gasoline
Natural gas
and more!
Metals are broadly strong
Gold has broken out
Structurally gold is in a bull market, having broken out from a 3-year base and finally escaped the 2011 highs. As long as we’re above $2080/oz. the long-term call should be higher.
Gold: Short-term look
More tactically, gold broke out to a 2-week high last Friday after a 6% pullback. $2278/oz. is tactical support and a potential stop for new money. On the verge of a bullish MACD cross (bottom panel).
Silver adds to the gold bull case
Silver hasn’t broken out yet but is $1.50 from clearing the $30/oz. level that has served as resistance since 2020. Another bullish sign is that the silver vs. gold appears to be breaking out higher. Because silver acts like a higher beta play on gold, this ratio moving higher is a bullish sign for both (see 2020).
Is copper a 14-year cup and handle pattern?
It’s hard to not get excited about the potential of copper, which is arguably trying to break out of a decade-long cup and handle pattern. The monthly MACD, which has been a remarkable forecaster, just flipped positive with April’s 13% gain.
Watch $4.80/lb. on copper futures
Zooming in on copper, you can see that it has broken out of a downtrend relative to gold. While the long-term chart is enticing, just below resistance at $4.80 on the futures contract makes this a tough entry point. I’d rather own it on a breakout and use that level to manage risk. $4.30 is first support as it stands now.
