GOLD / SILVER
The gold and silver markets like many other commodities are falling victim to escalating fear of global recession this morning. It is also likely that a minimal higher high in the dollar is providing added selling incentive. Yet another moderately negative overnight development is a 16th straight day of gold ETF outflows, with the overnight outflow 209,720 ounces a very significant reading. Even more negative to the precious metal markets is a massive 8.3 million ounces outflow from silver ETF holdings, with that outflow pushing total silver ETF holdings down 8.1% year-to-date. Futures are likely to advance from current levels today now that the ECB interest rate hike is out of the way.
PALLADIUM / PLATINUM
While the palladium market remains within recent consolidation pricing, the platinum market has forged a moderate failure on its charts and both markets should be pulled lower by a resumption of global recession fear. However, it remains extremely difficult to define the focus of the PGM trade as fundamental news flow has dried up, and the markets have no fear of disrupted supply from the world’s largest PGM producer. Furthermore, demand signals from the auto sector are delayed significantly and we suspect large auto manufacturers have piled in strategic PGM supply following the explosion in prices in the first quarter.
With the copper market yesterday posting a gain off last week’s low of $0.24, big picture macroeconomic sentiment very negative, signs of a strengthening dollar and generally disappointing US data from the housing sector, the bear camp has plenty of ammunition today. Supportive overnight news included a jump in June Chinese refined copper output of 10.3% and a decline in LME copper warehouse stocks of 2025 tons.
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