Written Commentary
GOLD / SILVER
While December gold did manage a 7-day high overnight, the market was unable to hold those gains and fell back to the psychological support level of $1750. It is likely that the initial pulse up move was the result of weakness in the dollar index and fresh concern toward Evergrande, but the dollar does not appear to be poised to fully reverse the September and early October rally. Given the significant range down action in December silver last week, we suspect the net spec and fund long in silver has reached the lowest level since June 2019.
PALLADIUM / PLATINUM
While the palladium market garnered some support from General Motors comments suggesting that the chip shortage was leveling out and that 4th quarter car production would be steady, demand expectations are not being embraced in the marketplace. However, the most recent COT positioning report showed a fresh record “net spec and fund short” in palladium. While the platinum net spec and fund long is nearing the lowest levels since February 2019, the market lacks bullish fundamental forces and supply news has been thin.
COPPER
In retrospect, both the US and China have disappointed the copper market with slack economic data and with an ongoing holiday in China the copper market might lack buying interest. However, US daily infections are on the decline, and we suspect the Chinese are stimulating their economy in the background. From the demand front it is a positive that Japanese smelter Mitsubishi announced it expects second half output to increase by 14.5%.
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