Written Commentary
GOLD & SILVER
Not surprisingly, the gold market has forged a significant recovery/relief rally after clearing the FOMC rate hike meeting. However, the rally has more credence given it has been forged after 2 weeks of general grinding gains. Apparently, gold, and other physical markets gleaned hope from market chatter embracing the potential that the rate of US interest rate hikes may slow. The gains in gold this morning are particularly impressive given World Gold Council projections that Chinese first half gold consumption declined by 12.8%, Not to be left out, the silver market has also extended yesterday’s impressive recovery and posted the highest price since July 5th in the early action today.
PALLADIUM & PLATINUM
In general, the PGM markets seemed to benefit from the idea that the rate of gain in US interest rates might slow ahead. Obviously, the platinum upside breakout is technically significant but does not appear to be the result of bullish fundamental news. However, after a long string of ETF outflows, platinum ETFs saw a moderate inflow yesterday. Platinum ETF holdings yesterday posted a notable inflow of 28,633 ounces, but year-to-date platinum holdings remain down 11%. On the other hand, palladium ETF holdings yesterday saw an outflow of 1193 ounces and those holdings remain down 13% year to date. Indirectly the PGM markets are drafting support from a much stronger than expected US durable goods reading, a reversal in the dollar and from a measure of equity market optimism flowing from Asia.
COPPER
Like many physical commodities, the copper market is adding to the relief rally after the passing of the US FOMC rate hike. In fact, with another higher high for the move in September copper, residual positive spillover from yesterday’s aggressive US equity market rally (and today’s Asian equity market rallies) and from news that Grupo Mexico 2nd quarter profits declined by 40% off material production losses because of protests in Peru. Therefore, South American supply losses are material to futures price action.
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