Copper Can Bounce. Manic Metals Report 07/31/2024

The freefall in copper seems to have stopped and suddenly is starting to latch on to a positive economic environment. As I mentioned last week the surprise interest rate cuts from China probably means they are going to do everything they can to stimulate the economy and there are rumors that they’re getting ready to act once again.

The big thing for copper and the other metals today will be the Federal Reserve decision.

It’s more likely that we’re going to see an interest rate cut. Not only is it pretty much priced in completely for September. There are even rumors that the Fed could surprise us today and give us a little suggestion that it could happen as soon as August.

Copper is still going to be tight as the demand for power will be incredible because it is the best conductor of the new electric powered economy.

Naureen Malik at Bloomberg touched on it saying that power prices on the biggest US power grid are about to hit a record-high amid a wave of plant retirements and surging demand, thanks in part to new data centers being built.

Copper hungry generators will keep copper demand strong. Malik says that generators that provide electricity to the 13-state grid that stretches from New Jersey to Illinois will get a record $269.92 per megawatt-day from utilities to provide capacity overall 12-month period starting in June, according to results of an auction by grid operator PJM Interconnection LLC disclosed Tuesday. That’s more than a ninefold increase from $28.92 in last year’s auction.

 She says that the results of the auction underscore the challenges of the energy transition: cheap solar and wind power are making older plants, including coal-fired generators, less competitive, but a sudden burst of electric demand to meet the needs of factories and data centers to enable artificial intelligence along with broader electrification risks straining grids.

We will need more copper.

Reuters is reporting that Rio Tinto may consider a large acquisition, but it would have to provide value that is hard to find amid a copper market that is running hot, CEO Jakob Stausholm said on Wednesday while discussing its first-half results.

In the meantime, risk on seems to be back or at the very lease hedge funds are eager to cover metals before the month end. The concerns of course about the copper has been the slowdown in China as I said last week when China did the surprise rate cut that they probably will do whatever it takes to support the economy that means they will do whatever it takes to support the price of copper.

Gold and silver also right back on the rise and they should continue though platinum does usually have a tough time in the month of August in fact 13 out of the last 15 years platinum has gone down it might be an opportunity to go long gold and short platinum as we get into the month of August.

Today for medals is going to be all about the Fed increasing geopolitical risk could also add to some risk buying in gold . . Right breaking the ADP jobs report came in weaker than expected at 122,000 jobs versus 50,000 expected that should increase the odds that the Fed today will be more accommodative.

 Stay tuned to the Fox Business Network! Make sure you get the Phil Flynn daily trade levels! Also get the famous Phil Flynn energy report. Call me at 888-264-5665 you can also open your account by emailing me at PFlynn@pricegroup.com.