GOLD & SILVER
Despite higher initial action today traders should brace for position squaring selling as traders move to the sidelines ahead of what is expected to be another “jumbo” US rate hike. With the gold market unable to rally off news yesterday of a Japanese import ban on Russian gold (starting August 1st) and discounting news of a significant jump in Hong Kong gold exports to mainland China, the bear camp retains control. However, it should be noted that last week gold prices managed a significant recovery rally in the instant aftermath of the ECB rate hike!
PALLADIUM & PLATINUM
As in the oil market, the PGM markets have proof of the porous condition of Russian embargo efforts, with China registering record June palladium imports from Russia. However, the PGM markets virtually discounted that news overnight as another example of a market lacking classic fundamental sensitivity. Therefore, we are not surprised to see a downgrade of PGM forecast prices from UBS as supply losses are very unlikely to surface now because Russia has established an outlet to supply global demand via China. Furthermore, threats against demand are on the rise with Wall Street beginning to express concerns for major auto makers in the event of recession.
With an upside breakout to the highest level since July 11th overnight the copper trade is sensing a slightly better condition regarding China. In fact, seeing the Chinese provide a $44 billion bailout package for their real estate development sector helps to improve Chinese copper demand views quickly. Evidence of the positive fundamental shift in copper market psychology is expanding Chinese copper premiums for import and prompt refined copper.
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