Platinum Likely to Extend Slide

PLATINUM / PALLADIUM

With another failure/lower low for the move overnight, July platinum looks to extend its slide with near term targeting the early March consolidation lows. In retrospect, 3 interest rate cuts by the Chinese central bank has failed to improve views toward Chinese industries using platinum in industrial processes with another negative yesterday flowing from evidence of significant market share gains by EV’s in China. With the failure on the platinum charts again, global risk sentiment deteriorating further, Chinese stimulus efforts falling short and the potential for ongoing stop loss selling among speculative long positions, the palladium market has deservedly cut straight through the potentially credible $950 support level. Adding to the bearish tone is the recent pattern of outflows from platinum ETF holdings and a lingering large net spec and fund long positioning both of which are likely to feed additional stop loss selling. Without a surprise Chinese targeted stimulus announcement or a definitive return to global “risk on” psychology, July platinum appears destined to retest early March consolidation low levels. With a host of physical commodities under pressure today platinum showing signs of significant weakness the biggest and perhaps temporary support for palladium is the potential for further long platinum/short palladium spread liquidation.

GOLD / SILVER

While the ebb and flow of action in the US dollar has been buffeting the gold and silver trade this week, minimal weakness in the dollar this morning has not provided visible support. Clearly, reiterated hawkish commentary from the US Federal Reserve Chairman to a US congressional committee prompted the initial washout in gold prices yesterday. Adding into the pressure from hawkish US dialogue is a Norway central bank rate hike to 15-year highs (with threats of more on the way) and expectations that the Bank of England will raise rates by 25-basis points in the coming hours. In another sign of waning investment interest, gold ETF holdings yesterday saw another large outflow of 83,171 ounces leaving year-to-date holdings down 0.2%. Fortunately for Silver Bulls, silver ETF holdings yesterday saw a large inflow of 5.6 million ounces in what was the largest one-day inflow since April 25th. Given reports of softening growth in Chinese gold and jewelry sales and with both gold and silver violating key chart support levels this week, fundamental and technical signs favor the bear camp. In conclusion, gold and silver show strong downside breakout potential early today with that bearish influence compounded by the lack of fresh bullish fundamental news for either market.

COPPER

While the declines in the dollar this morning were not enough to lift gold and silver prices, press coverage overnight indicates the dollar has helped copper trade higher. Adding to the bullish track is an overnight decline in LME copper warehouse stocks as that news adds to recent chatter of tightening supply inside China within the industrial supply chain. As indicated yesterday, a regional measure of base metal inventories in China showed declines in copper, aluminum, zinc, nickel, lead, and Tin and that adds credence to talk that copper supply is tightening inside China. Another sign of tightness in global copper supplies came from the LME where On-Warrant copper inventories fell to the lowest level since October 2021. According to the exchange, the drawdown in copper on warrant in London was the result of increased buying for copper warehouses in New Orleans. Not surprisingly, the bull camp remains confident with the backing of an entrenched and uniform uptrend channel on the charts. According to market chatter yesterday, copper saw a slight increase in its sensitivity to action in the dollar with copper benefiting from the dollar’s inability to hold early gains yesterday.

Interested in more futures markets?  Explore our Market Dashboards here.