GOLD / SILVER
While the gold market forged a very damaging reversal yesterday, prices have clearly respected psychological support at $1800 again this morning and that combined with a series of safe haven headlines should firmly underpin prices. Fortunately for the bull camp gold ETF holdings increased for the 10th straight day yesterday with an addition of 109,346 ounces to bring this year’s net purchases up to 21.4 million ounces. It should also be noted that silver ETF’s added 1.7 million ounces with year-to-date net purchases now at 201.7 million ounces. In addition to the US sanctions against Chinese “leaders” the gold market should see ongoing lift from significant infection surges in India, Australia and the US. Another potential safe haven ignition for gold and silver today is seen from overnight concern for liquidity in China after a surge in interest rate swaps overnight.
We are little impressed with the action in palladium as yesterday’s large range up move shifted charts from bearish to bullish and prices earlier today did make another attempt to regain the $2000 level. The palladium market might derive some support from a forecast from ABN AMRO which raised their average price forecast for 2020 to $2051. We do get the sense that trading interest in spreading between the 2 PGM markets is on the rise again with palladium gaining on platinum on risk off days and platinum gaining on palladium on risk on days.
While the bull market in copper has been extremely difficult to derail a series of stories overnight combined with a potential risk off day in equities off surging weekend infection count fears could result in some long profit-taking. First and foremost, the copper market should see demand fears following the US sanctioning of Chinese leaders as that could rekindle trade strife between the two countries. However another major negative was seen overnight with a 20% jump in weekly Shanghai copper warehouse stocks as that suggests prices are now high enough to pull back supply to the exchange/marketplace.
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