Gains in metals and grains drive commodity open interest value to a six-week-high – JPM

The estimated value of open interest across global commodity markets surged to a six-week-high, up by 2.6% week-on-week to ~$1.45 trillion as of July 5, primarily led by price-based gains across metals and grain and the oil seed markets, JPM Commodities Research said.

Inflows, calculated across all trader types, returned to global commodity markets, totaling $10.8 billion week-on-week, after six weeks of outflows. The inflows were concentrated in gold and grains & oil seeds markets, while energy markets registered modest outflows, the report said.

The estimated value of open interest across precious metals markets jumped by 9.5% to ~$194 billion in the week to July 05, the strongest weekly increase since mid-May, JPM analysts noted.

The nearly $16 billion week-on-week increase in precious metals open interest value was predominately driven by $10 billion of inflows last week, mainly concentrated in gold.

Gold prices (XAUUSD:CUR) rose to nearly $2,400/oz once again late last week, but prices have slipped early in the week after China’s PBoC reported unchanged gold reserves for the second consecutive month in June. On the day, prices were trading +0.12% to $2,364.65 an ounce by 6 am ET.

JPM says, its analysts “remain bullish on gold prices into year-end, seeing prices rising towards $2,500/oz in 4Q24 as the path towards a September rate cut by the Fed has grown wider given the recent cooling in a very tight U.S. labor market.”

Meanwhile, across base metals markets, the estimated open interest value climbed by 2.6% to just over $200 billion.

Copper prices have rebounded from a recent low of around $9,500/mt back towards $10,000/mt, yet little has changed in relatively slack Chinese refined copper fundamentals. JPM analysts, however, still think that China needs to more fully digest its excess inventory before there is a further sustained push higher in copper prices.

Turning to the global agri commodities market, estimated open interest value increased by 3% to a three-week high of ~$298 billion.

Recent Commodity Price Movements and A look At Some ETFs