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Less Downside Action in Metals


Despite a slight improvement in global sentiment this morning, a setback in the dollar, lower treasury yields and efforts to tighten sanctions on the Russian gold sector, gold prices remain under pressure. Apparently, the EU is adopting a new package of sanctions to tighten loopholes in various Russian exports like gold. Investors continue to exit gold and silver ETF instruments with 100,049 ounces flowing out of gold holdings yesterday and 825,744 ounces exiting silver holdings yesterday. In retrospect, given that the major washout in gold and silver prices yesterday took place in the face of a clear escalation of economic uncertainty and in the face of evidence of surging inflation, it is clear precious metal markets remain fixated on a surging dollar and persistently rising rates.


As in most physical commodity markets, the PGM markets are capable of spike down moves directly ahead. In fact, the PGM markets have been nearly devoid of “any” key fundamental developments over the last several weeks, and therefore downside action is likely attributable to recession expectations. However, the bear camp should be emboldened by an ongoing and aggressive pattern of outflows from both palladium and platinum ETF holdings.


Negative news continues to flow for copper with LME and Shanghai copper stocks rising, disappointing Chinese 2nd quarter GDP readings, fresh damage on the charts overnight and most importantly reports of the highest Chinese Covid cases registered since May. With the new infections showing up in a southern province and China expected to maintain its zero Covid policies, the headwinds for the Chinese economy are likely to pick up again. Another day, another fresh contract low in copper prices with fears of slackening global copper demand nearly all encompassing.

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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