The path/trend remains down until there is a paradigm shift
GOLD / SILVER
With another sharp range up extension in the dollar, gold and silver start the last trading session of the week on a negative track. A possible result of the residual bearishness toward the metals from this week’s debacle washout is an outflow of 152,439 ounces from gold ETFs and a very large 5.9 million ounces decline in silver ETF holdings. It should be noted that silver ETF holdings have seen several very large daily outflows over the last 2 weeks in a possible sign that investors are fleeing the instruments after the massive slide in futures.
PALLADIUM & PLATINUM
While the uptrend in the palladium market has been relatively benign, yesterday the market gathered upside momentum and posted a strong close after regaining the $2,000 level. In short, palladium prices are exhibiting more aggressive action and are tracking near 20-day highs, therefore the technical picture clearly favors the bull camp. While some traders will see the reduced-price forecast for palladium from Bank of America as a negative, we discount those forecasts as backward-looking adjustments to big market movements.
In addition to a major need to correct an extreme oversold condition, the copper bulls yesterday were assisted by hope of a $220 billion stimulus package from the Chinese government. In our opinion, China is likely to announce the stimulus to cushion anxiety in the event portions of Shanghai are returned to lock down. Keep in mind, that the Chinese on Wednesday indicated they planned to test 25 million people in Shanghai within 3 days, and therefore the markets should see results from China at some point today. While the copper market was already aware of the potential of lower copper supply flow from Chile, that development was verified yesterday by a drop in Chilean copper export revenues in their monthly trade report.
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