Soft Jobs Strong Metals. Manic Metals Report 07/09/2024

The metals outlook is starting to look more bullish.  Bullish outlook comes as the London metals exchange (LME) stocks of both copper and aluminum both drop and expectations that Fed Chairman Jerome Powell will have to acknowledge weaker private sector job growth and less threatening inflation in his testimony in front of the Senate Banking Committee today.

The elements of the copper inventories fell by 450,000 tons to 191,025 tons, that should stop the recent correction and point price is higher although my main mentor is also have a substantial drop of 5.650 tons to 988,525 thousand tons.

 Seeking Alpha pointed out that Copper and aluminum prices likely will increase over the medium term on rising demand from electrification, a growing global economy and supply constraints, Jefferies analysts say Monday, recommending investors buy shares of preferred copper and aluminum producers, led by Alcoa and Glencore.

The bank says it is cautiously optimistic about the H2 outlook for mined commodity prices and say they will crunch numbers including global manufacturing PMIs, China credit growth and property market data to determine if demand is recovering from its Q2 soft patch.

India PMIs and U.S. ISM will also be important to track for 2H, while “interest rates, inflation, the Fed, and the outcome of the U.S. elections will all matter a lot as well,” the analysts say.

The optimism stems from an expectation that China’s industrial activity will marginally improve, and economic growth will be strong in India and Southeast Asia, while infrastructure projects will likely break ground in the U.S. and the Fed could cut rates according to Seeking Alpha.

We agree with that assessment as we have been talking about the potential supply squeeze on copper and aluminum. It does seem that yesterday sell off was overdone and generally caught up in a lot of the commodity sell off on Monday.

Gold and silver also look like it is back in a buy zone after yesterday’s sell off its long as Fed Chairman Jerome Powell does not upset the apple cart by sounding too hawkish more than likely we could see a substantial recovery over the next couple days in both gold and silver. Silver’s price as of 9 a.m. ET yesterday was $31.02 per ounce. That’s up 0.89% from the previous day and up 29.63% since the beginning of the year. The lowest price for the precious metal in the last 24 hours was $30.62 per ounce per ounce. The highest was $31.49 per ounce.

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