Written Commentary
GOLD & SILVER
Gold prices were a bit higher overnight as Treasury yields and the dollar slipped, but the move was minimal relative to Wednesday’s selloff in reaction to the FOMC meeting minutes. Owning gold is considered an inflation hedge, but with a Fed committed to raising rates to stem inflation, gold has a harder time competing with interest-bearing instruments, such as Treasuries. Recession fears could prompt some safe- haven interest in gold as well, but we saw the opposite early this week when Chinese data came in weak and initiated a selloff in gold. The hawkish stance was not really a surprise, but it did appear to open the door for the metals to resume their downtrend off the recent highs. Earlier in the session, a “double-digit” year-over-year reading for UK CPI ramped-up rate hike expectations in the euro zone.
PALLADIUM & PLATINUM
Platinum and palladium were higher overnight after weak closes yesterday. A stronger dollar, pressure from gold and silver, disappointing economic numbers, and a lack of news on the supply/demand front have left these markets with little to lean on. Gold is focusing on inflation data, but platinum and palladium could benefit from strong business activity, consumer confidence or other data the show a resilient economy.
COPPER
Copper prices have been weighed down by demand concerns, and they have fallen more than $0.16 below last Friday’s high. However, they did bounce back from a 1 1/2-week low overnight to post a moderate gain. A decline in risk sentiment after a set of sluggish Chinese economic data on Monday has pressured the copper market, but risk appetites improved a bit following yesterday’s release of the July FOMC meeting minutes, and that has provided underlying support. LME copper stocks fell for the fourth straight session today, but they have held within a relatively tight range since late June, suggesting global demand remains lukewarm.
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