GOLD / SILVER
While the gold market showed some corrective action at the end of last week, prices have started the new week out strong and we remain long-term bullish toward the market. In fact, with ETF investment continuing to flow in, uncertainty from expanding second wave of infections and US treasuries last week returning to the vicinity of the “panic highs”, we leave the bull camp with an edge. While silver could be subjected to aggressive physical selling in the event of a worldwide economic letdown from surging infections, its charts remain very bullish. Silver is also attractive relative to gold and palladium with silver relative cheaper versus its historical highs.
PLATINUM / PALLADIUM
While we remain highly skeptical of the palladium bull market, the charts over the past two weeks have shifted positive with the highest trade since early June seemingly linking the market back with gold and silver. Unfortunately as in other physical commodity markets, the trade could be threatened with a downward adjustment in physical/industrial demand expectations in the event a risk off week unfolds in the wake of the infect surge. As opposed to the palladium market, the platinum market charts have broken down from last week’s spike high and that combined with a burdensome net spec and fund long position could leave the market very vulnerable with an initial downside target seen at $829.40.
Despite the extension of consecutive days of new record global infections, Chinese sanctions against two US senators and a short-term overbought condition from a 3-day 17 cent rally, the bull camp retains control over copper. Apparently a number of supply-side developments have shifted the focus of the copper market away from demand fears with infections threatening production in Chile, a potential labor action at Antofagasta and ongoing very notable declines in daily LME copper warehouse stocks. A slight limiting force for copper is flooding in China which is potentially set to backup copper concentrate flows inside the country.
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