Written Commentary
GOLD & SILVER
With the dollar index forging another new high for the move and the 3rd highest daily trade of 2022, the initial weakness in gold and silver is fully justified. While gold ETF holdings on Friday increased by 69,512 ounces, last week gold ETF holdings declined by 307,558 ounces. Similarly, silver ETF holdings on Friday fell by a very significant 1.8 million ounces, with a weekly reduction of 1.38 million ounces last week. Chatter regarding the magnitude of the next US interest rate move (more news on that front is expected from the Fed symposium on Friday) and an established uptrend in the dollar leaves the bear camp in gold and silver in control. Fortunately for the bull camp, both China and India recently showed positive jewelry import demand.
PALLADIUM & PLATINUM
With the palladium market rejecting the vicinity of $2,102 on two occasions last week, the early failure of that level today suggests the correction off the August high looks to extend. While the net spec and fund long in palladium remained net spec and fund short last week, the short positioning was likely moderated with last week’s sideways chop and therefore fresh selling could surface and foster a quick return to $1,980. Unlike palladium the platinum market is in freefall with the market sliding to a fresh low for the month of August. Obviously, the platinum market is heavily impacted by the fear of aggressive US rate hikes which in turn are thought to be slowing the economy and hindering global auto sales. Also, unlike palladium, the platinum market maintains a moderate net spec and fund long positioning which could allow for additional stop loss selling.
COPPER
While the ability to consolidate on the charts and reject the $3.5420 level offers technical support to copper, lingering demand fears offer fundamental resistance. Fortunately for the bull camp, last week both LME and Shanghai warehouse copper stocks declined sharply with evidence of extreme tightness in China surfacing frequently. In fact, industrial power cuts (because of extreme heat) were included in Sunday’s emergency response in China which should tighten copper supplies inside China even further.
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