Written Commentary
GOLD / SILVER
Despite several quarters of obvious inflation flowing from classic inflation readings, and surging food and energy costs, the precious metal markets appear to be taking notice. By a process of elimination, the gold and silver rallies on Tuesday were thought to be the result of inflation fears. While gold and silver have not been particularly sensitive to inflationary developments, they have been greatly impacted by treasury yields, the dollar and at times the oil market. Going forward, the precious metal trade is likely to continue to factor in a hot CPI report for Thursday.
PALLADIUM / PLATINUM
Yesterday the PGM markets were higher on the day while gold and silver prices were lower, which suggest the markets are tracking different fundamentals. However, palladium and platinum might be taking a break from the intense focus on Russia supply disruption threats because of talks between the French and the Russians and that shows Russian is willing to negotiate. On the other hand, comments from the CEO of the largest US car seller in 2021 (Toyota) suggested that the chip shortage was beginning to moderate and that could help revise PGM demand higher because of auto catalysts.
COPPER
With a sharp setback in iron ore prices overnight, the initial weakness in copper is justified. However, copper prices should be underpinned because of news that the Chinese manufacturing sector in 2021 posted the highest percentage of GDP reading in 27 years. In other words, the Chinese economy remains heavily dependent upon its industrial capacity.
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