Written Commentary
GOLD & SILVER
Despite minimal outside market headwinds gold enters the Wednesday session virtually unchanged and within striking distance of yesterday’s upside breakout highs. In a minimally supportive development overnight Harmony gold showed a slight decline in the first half of production this year but managed to produce a profit. The company produced 1.47 million ounces of gold over the year compared with 1.49 million ounces and guidance of 1.4 million to 1.5 million ounces. In retrospect, the focus of the gold and silver trade shifted to rates as yesterday’s discouraging US job openings and labor turnover report was soft and that vaulted expectations for a pause by the Fed in their next meeting. The 2nd most important driving force for the bull camp is the reversal down in the US dollar but given the drop in US treasury yields, gold has seen major outside market forces become beneficial. While the gold and silver trade were not overly concerned about the Fed hiking rates next month, soft jobs related data in the US again today increases the odds monthly US jobs data on Friday will be soft.
PLATINUM & PALLADIUM
While the platinum market has not technically forged a higher high this morning, prices sit just under yesterday’s high and appear poised for more gains ahead. Unfortunately for the bull camp platinum ETF holdings yesterday declined by 9417 ounces which given the sharp gains in platinum futures and ETF prices this week that seems to suggest investors are exiting on the rally. Divergence between platinum and palladium continues with platinum the preferred PGM market of speculators. Surprisingly, the palladium market continues to track sideways despite strength in gold, silver, and platinum.
COPPER
Despite a wave of gains in many physical commodity markets yesterday (because of reduced rate hike fear and a weaker dollar) the copper market has extended the recent pattern of lower highs leaving technical and fundamental signals pointing down. Seeing LME copper warehouse stocks continue to build remains a steady headwind for copper prices especially with Chinese manufacturing and nonmanufacturing PMI readings scheduled for release tonight. Fortunately for the bull camp Chinese NBS manufacturing PMI for August is expected to be a notch higher as nonmanufacturing PMI is expected to be several notches lower.
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