Commodities Hang Tough Despite Falling Interest Rates

From the Desk of Ian Culley @IanCulley

The tide is turning for commodities now that the dollar and rates are falling.

Crude oil is relinquishing its leadership role. Gold and silver are catching a bid. And copper is digging in at former support.

But it’s not only base and precious metals bouncing off critical levels…

Check out our Equal-weight Commodity Index refusing to roll over:

Our commodity index, comprised of an equally weighted basket of 33 commodities, is finding support at a shelf of former highs. This is the principle of polarity at its finest – former resistance turning into support.

While it’s still too early to get behind the next broad-based rally in commodities, copper-related mining stocks are following Dr. Copper’s lead – a bullish data point not to be ignored.

Check out the copper mining bellwether Freeport-McMoRan $FCX bouncing off a critical polarity zone:

Buyers stepped in and defended the May lows at approximately 33. It’s an excellent level to trade against, targeting the year-to-date highs of roughly 45.

From an intermarket perspective, a sustained rally in FCX supports a burgeoning risk-on tone for stocks and commodities.

This newfound risk-seeking behavior for copper miners couldn’t come at a more opportune time, given the stock market entered a seasonally strong period.

Say what you will. But it’s difficult to hold a bearish bias for risk assets – commodities included – as long as DR. Copper and FCX hang tough. 

Stay tuned.

COT Heatmap Highlights

  • Commercial hedgers post another three-year extreme for their long exposure to KC wheat.
  • Commercials are within five percent of their most significant long position for the Canadian dollar in three years
  • And commercials hold a new record-long position for Minneapolis wheat for the second week running

Click here to download the All Star Charts COT Heatmap.

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