Written Commentary
GOLD & SILVER
While we see the gold and silver markets tracking in tight ranges into the US FOMC rate decision, the gold market overnight showed little reaction to a very bullish jump in June Hong Kong net exports to mainland China. Hong Kong June net gold exports were 43.5 tons versus 14.1 tons in May and given that China is the world’s largest gold consumer that number should have sparked some overnight buying. Furthermore, while the gold market managed a higher weekly close, we attach little significance to that reversal into this week’s action.
PALLADIUM & PLATINUM
We have very little positive to say about palladium and platinum from a fundamental perspective! Both markets continue to see definitive liquidation from ETF holdings (a sign of negative investment sentiment) with platinum last week registering an outflow of 18,999 ounces putting the net outflow this year close to 10%. Similarly, palladium ETF holdings also decreased by 1,129 ounces and are now 13% lower year-to-date.
COPPER
As in several other physical commodity markets, copper has recently recovered and has forged rally without definitive support from classic fundamentals. In retrospect, the massive outflow of copper from the Shanghai copper warehouse last week of 20,982 tonnes is very supportive as Chinese supplies are tightening and that serves to offset the unending lockdown pressure on copper demand. In fact, Shanghai warehouse stocks fell by one third and declined by 29.4% on a week over week basis. To put the tightness at the Shanghai exchange in further perspective, continuing the pace of withdrawal seen Friday for two additional weeks would virtually remove all stocks from the exchange.
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