Lift for Platinum Prices

PLATINUM / PALLADIUM

While we do not see a tight positive correlation with treasury prices and platinum, the decline in treasury yields and reduced odds of a US rate hike next month probably provided a modest fundamental lift for platinum prices yesterday. In what could be a sustainable positive demand development Bloomberg has a story this morning expecting platinum demand for increased auto glass production could possibly match the very strong demand seen from 2021! In fact, the Bloomberg article suggested auto glass demand like 2021 could push industrial use of platinum up by “mid double digits”. Unfortunately for the bull camp, platinum ETF holdings yesterday saw a significant 7563-ounce outflow reducing the year-to-date gain in holdings to 9.8%. Not surprisingly the palladium market failed to follow platinum prices higher yesterday probably because of the lingering impact of the Russian Norilsk Nickel predictions last week of a lower than previously predicted 2023 world palladium deficit. It is also possible that palladium will be presented with further outflows from palladium ETF holdings later this week.

GOLD / SILVER

While August gold has managed to maintain yesterday’s recovery bounce, the gold market starts Tuesday’s trade in the middle of the near-term anticipated trading range of $1950 and $2000. With the August gold contract falling sharply yesterday, posting a 4-day low early and then mounting an impressive $22 per ounce recovery off the low, the market might have become short-term oversold. Not surprisingly, the silver market also forged a range down reversal from the initial low of $0.25. We suspect the ability to reject the early washouts on Monday was primarily the result of a reversal down in the dollar index which by midsession was trading 38 ticks below the early high. Even though gold and silver prices started falling before the first set of US scheduled data yesterday, the declines accelerated following softer than expected US S&P PMI, factory orders and ISM services PMI readings. Seeing a clean sweep of soft US scheduled data certainly adds to the prospects the Fed will hold steady in the week’s meeting. Unfortunately for the bull camp the Royal Bank of Australia raised interest rates 25 basis points overnight in a move that presents fresh headwinds for precious metal markets and commodities in general.

COPPER

Like many physical commodities markets, the copper market yesterday probed below recent consolidation low support at $3.70 and promptly rejected that weakness as if the trade saw value. However, Bloomberg is reporting Chinese copper smelting activity recovered in May potentially pushing more refined supply into place on a suspect demand base. However, copper concentrates inventories at 5 major Chinese ports apparently fell sharply last week potentially keeping some supply tightness present early in the supply chain. While the July copper contract probed below the Friday high on Monday, the market quickly rejected the weakness and by mid-session was trading $0.08 above the early low. Apparently, the early wash was a function of renewed copper demand concerns in China and the US. In fact, it was surprising to see copper hold gains in the face of a wave of patently disappointing US S&P global composite and services PMI readings. Even more surprising, the copper trade discounted softer than expected US factory orders and softer than expected ISM services new orders, and softer ISM services employment index readings.

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