Commodities Weekly: Silver plays catch up

In the precious metals space, silver has outperformed its peers this month, playing catch up after months of being a laggard. The energy sector is feeling some pressure while the agricultural commodities are struggling to maintain any upward momentum.

Precious metals

SILVER looks to be on track for the biggest monthly gain in seven months as July nears its close. The precious metal also managed its first close above the 200-week moving average since June 2018 last week after touching the highest level in 13 months.

Silver appears to be catching up with gold’s out-performance last month as the gold/silver (Mint) ratio extends its retreat from record levels. The Mint ratio is now facing its biggest monthly drop since April 2016 after hitting a record high on July 3. The ratio has tested support at the 200-day moving average at 86.043, which appears to have held for now.

Gold/Silver Daily Chart

Source: OANDA fxTrade

Speculative investors boosted their net long positions to the most since the week of February 26, according to the latest data snapshot from CFTC as at July 23. Meanwhile, exchange-traded funds trimmed 1.13 million troy ounces from physical holdings in the latest trading session, the biggest one-day drop since May 20, according to a Bloomberg report yesterday.

GOLD prices reached the highest in more than six years on July 19 and have been consolidating in a tight range since then. Central banks remained buyers of the precious metal in June, though China’s buying was at a slower pace than previous months, while Russia and Poland accelerated purchases.

Speculative investors were net buyers of gold for a second consecutive week, according to the latest report as at July 23 from CFTC.

PLATINUM has advanced for a second consecutive month this month and touched the highest since May 1 last week. The metal is hovering below the 78.6% Fibonacci retracement of the April-May drop at 888.16. Speculative accounts are positioned for further gains, having boosted net long positions to the highest since May 14, according to the latest data from CFTC.

PALLADIUM has trended higher in the past week, climbing the most in a week yesterday. The 55-day moving average was above the 100-day moving average last week for the first time since May 24, which is often interpreted as a medium-term bullish signal.

Base metals

COPPER has had a good start to the week as the US-China trade talks get underway again. Hopes are for some significant, tangible progress, though the messages from both sides in the run up to the meetings appear to be slightly pessimistic, even suggesting not to expect too much. As such, copper’s gains could be temporary and could retrace in the second half of the week if no positive headlines are forthcoming.

Speculative investors were net buyers for a second week in the week to July 23, but are still net short, albeit at the lowest levels since June 18. Copper has held above the 55-day moving average on a closing basis for the past two weeks.


NATURAL GAS is shaping up for its eighth monthly decline in a row, with this month’s drop the biggest in seven months. The market is still suffering from oversupply and the European heatwave that might have caused a pickup in demand over the past few weeks is coming to an end. Weekly inventory data from EIA to July 19 showed a further increase in stockpiles, the 17th consecutive week of additions.

Speculative investors have been correctly positioned for the move, having increased net short positions to the most since March 2016 in the latest reporting week to July 23. China’s natural gas imports in June were down 10.3% from a year earlier to just below three million metric tons. However, Liquefied Natural Gas (LNG) imports were up almost 15% from a year earlier in the month, and up 2.2% from the previous month. Australia became the top LNG supplier to China in June, delivering 2.39 metric tons.

The demand outlook continues to dominate CRUDE OIL direction, with gloomy forecasts applying pressure on prices. Disappointing manufacturing PMI data out of the US and Germany last week added to the downward pressure.

There has been some level of support provided by the tensions in the Straits of Hormuz, with a stronger military presence in the area deemed necessary to protect supply routes. In addition, the number of US rigs in production fell to the lowest since February as at July 26, according to the Baker Hughes index, which might suggest lower supply from that region. China imported a record 7.72 million tons of crude oil from Saudi Arabia in June, the latest China customs data show.

West Texas Intermediate (WTI) flirted with the 200- and 55-day moving averages at $56.835 and $56.995 respectively toward the end of last week, and today saw the first opening price above the 200-day average in two weeks. WTI is now at $57.13 and also trading above the 55-day moving average.

WTI Daily Chart

Source: OANDA fxTrade


WHEAT looks set to snap a two-month rising streak this month, holding below the 100-month moving average for an 11th straight month. Speculative investors were net sellers of the commodity for a third consecutive week, reducing net long positions to the lowest in six weeks.

An industry agency in Russia raised its forecast for the country’s wheat crops to 76.4 million tons for this season from 76.1 million at the previous estimate. However, it noted that a lack of rain in Siberia, where harvesting is due to commence at the end of August, could disrupt this forecast. Meanwhile, Argentina, the world’s sixth biggest producer, is looking at a record output for this season, and could increase its portion of global wheat exports to 7.7%.

SOYBEAN prices are finding support from speculation that China is about to increase its imports of US soybeans as the trade negotiations with the US restart. Indeed, the Xinhua News agency has reported that “several million tons” of US soybeans have been shipped to China since the two leaders agreed to resume talks last month. There are also rumours that some China companies will be given dispensation to have tariffs on US soy imports waived.

Speculative accounts were net sellers of the commodity in the week to July 23, pulling net long positions from near-six month highs, according to CFTC data. Prices are hovering above the 200-day moving average at 8.7823 as the 55-day moving average is poised to cross above the 100-day moving average for the first time since April 17.

Soybeans Daily Chart

Source: OANDA fxTrade

SUGAR prices have been testing the 55-day moving average for the past few sessions, but so far have failed to sustain any move above it. Speculative accounts are positioned for a move higher, though the total of net long positions is at its lowest in five weeks.

CORN is hovering near four-week lows and has traded below the 55-day moving average for the past three days. Speculative investors were net sellers of corn for a second straight week to July 23 and remain bearish on the commodity, with net short positions at the highest since the week of June 4, according to CFTC data.

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Andrew Robinson

Andrew Robinson

Senior Market Analyst at MarketPulse
A seasoned professional with more than 30 years’ experience in foreign exchange, interest rates and commodities, Andrew Robinson is a senior market analyst with OANDA, responsible for providing timely and relevant market commentary and live market analysis throughout the Asia-Pacific region. Having previously worked in Europe, since moving to Singapore he worked with several leading institutions including Bloomberg, Saxo Capital Markets and Informa Global Markets, proving FX strategies based on a combination of technical and fundamental analysis as well as market flow information. Andrew began his career as an FX dealer with NatWest and the Royal Bank of Scotland in the UK.
Andrew Robinson

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