GOLD / SILVER
With the dollar forging a slightly higher high for the move overnight, gold and silver are facing early outside market headwinds. Fortunately for the bull camp in gold, the April contract is building consolidation support around $1,875. While silver is also attempting to build a consolidation low formation, its charts remain more vulnerable than gold. In a positive overnight fundamental development for gold, Chinese gold reserves at the end of January were reported by the Chinese central bank to be 65.12 million ounces compared to only 64.6 million ounces at the end of December. Seeing the Chinese central bank increase (or admit to increasing) gold reserves is a significant development in favor of the bull camp. It should also be noted that the Chinese central bank purchase was the 3rd month in a row of net purchases. The 480,000-ounce month over month increase in Chinese central bank reserves is somewhat material from a month over month increase perspective but could be extremely important from a long-term psychological perspective. Another modest bullish development is a forecast from Freeport Indonesia of gold output in 2023 to remain flat with the prior year. Traders will be looking to several Fed member speeches this week, including one by Chairman Powell today, for reactions to last week’s jobs report and clues as to where they stand.
PALLADIUM / PLATINUM
With the platinum market yesterday violating a 3-month-old consolidation low support zone at $975 and sitting just above that level early today, the path of least resistance is pointing down. Unfortunately for the bull camp, the most recent positioning report showed platinum holding a net spec and fund long of 25,800 contracts which is 28,000 contracts longer than the net short seen last August. Therefore, the market retains stop loss selling potential especially if prices venture below yesterday’s low at $971.40. Fortunately for the bull camp, global equity markets overnight were positive and yesterday platinum ETF holdings saw an inflow of 2962 ounces and are now 1.5% higher year-to-date. With May palladium trading to a new contract low on Monday and posting its lowest level since December 22nd, the path of least resistance remains down.
Like the precious metal markets, the copper market has forged a measure of technical support with yesterday’s respect of a previous pivot point/consolidation zone of $4.00. The copper market should be pressured following news that Chinese copper smelting activity reached a 7-month high as that will add to internal domestic supply which has jumped sharply over the last 5 weeks. In a minimally supportive development yesterday Freeport Indonesia said their copper production this year will be flat. While a minimal impact on global supply Panamanian export flow of copper has been disrupted over a tax dispute with the Panamanian government. Despite building internal Chinese copper stocks, LME copper stocks reached a new 21st century low on Monday with their seventeenth draw over the past 18 sessions, but that continues to be offset by last Friday’s huge build in Shanghai exchange copper stocks.
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