The macroeconomic environment is changing: In recent weeks (if not months now!), geopolitical headlines have stopped driving daily moves in most risk assets, and the precious commodities were not isolated.
Metals were hit hard at first by conflict and rate-hike fears, but while that link has not disappeared, it is fading.
Energy is now the only asset class still reacting to news coming from the Middle East, mostly because of supply issues in Hormuz and the lack of a ceasefire agreement.
One of the most interesting parts of this breakout is the fact that Silver is moving higher without help from gold, which usually sets the direction for the alternative asset class:
Normally, silver follows Gold’s moves, but this time, the strong bounce suggests there is real demand and strong buying interest focused on alternative metals instead.
Traders could also be responding to China’s higher inflation report from yesterday, which suggests its inflation, a short-cut for economic activity after deflationary trends, is starting to recover.
Silver and Copper are not just precious metals—they are mainly industrial metals.
When China, the world’s largest industrial producer, shows stronger economic activity, it usually means demand for these metals is rising.