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!

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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.

Futures positioning throws some cold water on silver and copper