Written Commentary
GOLD & SILVER
The spike low in October gold could be indicating a short term low, but justification for a fundamental low is absent. In fact, it is hard to turn bullish when the Fed’s stance is as hawkish as it is and is expected to remain hawkish for the foreseeable future. Seeing China step up its purchases of Russian gold means that more supply is getting around the embargo barrier and is demand loss to other major metals trading houses beyond China is being documented. Like gold, the silver market also forged fresh downside breakout yesterday, but its rejection of that low was not as impressive as the bounce in gold.
PALLADIUM & PLATINUM
It appears if the palladium market is poised to chop in a range this week bound by $2089 and $2200. However, the palladium market was net spec and fund short in the last positioning report, it rallied aggressively off last week’s lows and forged those gains on the most significant 5-day trading volume since the middle of May. Pushed into a trend decision today we are a seller of rallies above $2200. Platinum seems to be following same ques as the gold market, where a strong dollar and a hawkish Fed are draining support.
COPPER
While the copper market has corrected significantly in the prior two trading sessions ($0.22) and the market was net spec and fund short in the last positioning report, the market remains vulnerable to further downside action because of surging Chinese demand fears. Apparently, global sentiment is very concerned with reports of fresh Covid flares in China with Bloomberg reporting “all provinces” reporting infections. Combine the potential for widespread economic lockdowns with Chinese property market problems and the fundamentals distinctly favor the bear camp. It should be noted that the copper market is not falling in a vacuum with zinc prices also falling sharply and in turn fostering fear of softening in global manufacturing activity.
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