Full Metal Frenzy! Gold, silver and bronze fly together

Wall Street Sights

2024-05-18 09:57Posted on the official account of Shanghai Wall Street News

Under the influence of the epic short squeeze of copper in New York, the global metal market ushered in a wave of "all-metal frenzy".

This week, copper prices on the New York and Shanghai stock exchanges hit new highs. Copper prices on the London Metal Exchange also recorded a 2.8% gain on Friday, approaching its all-time high in March 2022.

Meanwhile, silver prices climbed to an 11-year high and gold prices recovered to their all-time highs in April.

Silver: The Next Commodity to Explode?

Phil Streible, chief market strategist at futures firm Blue Line Futures, said the sharp rise in copper prices has boosted the price of silver, as silver is also seen as an industrial commodity, widely used in areas such as solar cells. He said:

"The three main factors influencing commodity prices are supply, demand and price trends, and silver currently has all three."

Since the beginning of this year, both industrial and precious metal prices have risen sharply, driven by a tight physical market and strong investor interest.

Wall Street has seen that although the headlines are mainly focused on gold, after all, gold has set historical records several times this year, but it is actually silver that has risen more sharply and faster. Silver is still cheap compared to gold after experiencing a relatively larger rally. It currently takes about 80 ounces of silver to buy 1 ounce of gold, while the average gold-silver ratio over a 20-year period is 68.

However, in the face of silver's surge, many analysts also hold a relatively cautious view:

UBS pointed out in the research report that silver provides an opportunity for investors to catch up at this time as many investors are caught off guard by the speed and magnitude of gold's price increase. The supply and demand of silver itself is indeed tight, but it is not enough to support the sharp rise in silver prices, but in the case of soaring gold prices, silver is naturally favored by investors as a cheaper and more volatile alternative to gold. HSBC expects global demand for silver coins and bars to decline, with many retail investors already buying silver coins and bars in large quantities over the past few years and currently showing little interest in increasing their holdings further. The high price of silver has prompted more silver coins and bars to flow into the secondary market, which has reduced the demand for newly minted silver coins and bars. Global inflation, while still there, is gradually easing. The outlook for silver demand in the jewelry industry is not promising. Silver is less in supply than demand, which serves to help prevent a sharp decline in the price of silver, but not enough to support a prolonged bull market.

The global precious metals market is becoming more volatile

The volatility in the global precious metals market intensified as supply disruptions caught the market off guard and a large number of traders with short positions closed their positions. LME nickel prices surged 7.9% on Friday following violent protests in New Caledonia, the world's third-largest nickel producer, the data showed.

Al Monroe, metals strategist at the Marex base in London, said:

"While there is talk of the current weakness in demand, we are facing supply issues, as the copper and nickel markets have demonstrated. We're talking about the futures market, and demand looks set to be strong in the future. ”

In recent months, the copper market has seen a long-short showdown that revolves around supply gaps and expectations of demand growth. This week, there has been a sharp shift in market forces, with a wave of short squeezing in the New York market causing traders with short positions to suffer significant losses.

In the global copper market, traders are scrambling to find delivery of the metal for contracts expiring in July, but are also challenged by supply constraints and shipping bottlenecks.

Copper on the London Metal Exchange reached $10,707 a tonne on Friday afternoon, close to a 2022 all-time high of $10,845, while Comex copper for July delivery rose 3.2%. Gold rose 1.3% and silver rose 3.7%. Gold, silver and copper-related stocks also rose.

Matthew Heap, portfolio manager at Orion Resource, the world's largest metals fund manager, said:

"Many Western funds are missing out on the rise in gold prices, but it's clear that they clearly don't want to miss out on the copper market.

This reflects the fact that the copper market has a clear story, and even in an elevator it is easy to explain the reasons for its price increase. ”

View original image 42K

• 

•