Written Commentary
GOLD & SILVER
With a minimal lower low and 4-day low overnight, October gold maintains a bearish bias into the Fed event. However, one could suggest gold is holding up relatively well this morning in the face of news of a 14.3% jump in first half Chinese gold production and in the face of another day of outflows from gold and silver ETFs. Adding to the bearish Chinese supply news is negative Chinese demand news with Chinese gold consumption dropping 13% in the first half relative to year ago levels. Fortunately for the bull camp, gold and silver traders have not displayed noted anxiety from the constant upward ratcheting of recession fear.
PALLADIUM & PLATINUM
In addition to further evidence of ongoing liquidation of platinum and palladium ETF holdings (overnight platinum holdings fell by 15,504 ounces and are now 10% lower year-to-date), the palladium market was dealt a significant blow from news that Russia has been exporting significant supplies to China. In other words, US, and EU attempts to economically isolate Russia with restrictions on dealing with Russian mining companies and financing arms has failed with China now the primary global PGM supply source.
COPPER
While technical traders will be emboldened by yesterday’s sharp initial range up extension, the market reversed aggressively after forging that rally thereby puncturing some of the bullish technical bubble. Obviously, chatter regarding Chinese infrastructure spending programs provided the ability to forge gains early this week, but the market now looks to turn its focus outward to macro-economic developments like the US rate hike decision today. It should be noted that LME daily copper warehouse stocks have continued to fall, and that combined with last week’s massive 20,000-tonne plus decline in Shanghai copper warehouse stocks leaves visible/market ready supply as a supportive issue.
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