GOLD / SILVER
With the US infection count reaching another record and escalating fears of regional lockdowns surfacing it, is possible that gold will see a critical trend decision today. As we have indicated several times this week, the fundamental and technical set up in the gold market continues to favor the bull camp. In fact, given the return to 8 year highs, rising open interest and a slight pickup in trading volume this week, the bull camp appears to be healthy and capable of regaining control. However, seeing the US push back timing for the next stimulus package clearly prompted some longs to bank profits and exit this week, with gains in the dollar this week also prompting some longs to vacate positions.
While the palladium market did not forge a fresh lower low for the move this morning the trend in the palladium market remains down with the charts freshly damaged yesterday and prices seemingly on a direct path down to $1,750. Certainly risk off psychology from US infections has been moderate so far but even in the best of economic conditions in the last 2 months, palladium has not garnered significant speculative buying from “RISK-ON”.
With the September copper contract yesterday rejecting a lower low and returning to this week’s highs this morning, the path of least resistance looks to remain up. Therefore, it would appear as if fears of slackening demand from the renewed US virus problem are more than offset by a pattern of global supply tightening. In fact more deaths at mine in Chile prompted management to reduce production and that follows mining union official requests from earlier in the for shutdowns to clean facilities. Looking ahead it is likely that mining unions in Chile will get shutdowns to clean facilities and limit infections.
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