Written Commentary
PALLADIUM & PLATINUM
Certainly, the palladium market has been dragged lower by recession expectations, with unending Chinese lockdowns and rising rates on car loans adding to the bearish demand orientated mix. Fortunately for the bull camp, palladium ETF holdings have shown little change over the past several weeks, but holdings year-to-date are down 17% indicating a lack of investor interest in the first 9 months of 2022. Investors continue to flee platinum ETF holdings with a 5,541-ounce outflow yesterday and the outlook for investment injured further by unending global recession views! While the January platinum contract has failed at the $850 level in two consecutive trading sessions, the market has also found a measure of support/value at that level.
GOLD & SILVER
In our opinion, the gold rally this morning is a function of the markets significant oversold condition from the prior 4 days washout and not because of sudden bullish interest in the yellow metal. In fact, investor interest in gold and silver remains soft, as gold ETF holdings declined for the 7th straight day with a large single day outflow of 272,702 ounces which leaves year-to-date holdings unchanged on the year! Similarly silver ETFs saw an outflow of 1.38 million ounces yesterday and year-to-date holdings have declined by 13%. On the other hand, Chinese gold demand might be improving as reports yesterday indicated Chinese net gold imports through the entry port of Hong Kong in August spiked up to a 4 year high with a net import tally of 68.2 tons.
COPPER
With the December copper contract rejecting a portion of yesterday’s sharp spike down new low for the move this morning and talk of increased Chinese copper demand for environmental purposes, the trade has been put off from pressing prices. While news regarding the status of Chinese lockdowns has been limited this week, the WHO indicates China posted only 295 new confirmed cases on Monday with reports that 60 of those infections were “imported”. Therefore, the Chinese copper demand threat could be set to moderate. Furthermore, a significant jump in Chinese copper smelter treatment charges could point to improving demand especially with those treatment charges reaching 5-year highs.
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