PALLADIUM / PLATINUM
Like silver, October platinum bounced off a contract low on September 1 and has been making consistent gains since. The market has corrected a deeply oversold status and is now short-term overbought. It punched through a resistance line on the daily charts on Tuesday and followed with further gains overnight. The first retracement of the March-September decline leaves an initial target of $946.60. Open interest has fallen steadily since the market put in its low, indicating the rally has been dominated by short covering. Platinum ETF holdings fell 355 ounces on Tuesday to 3.153 million. This marked the sixth straight day of declines. Palladium may have been damaged by an announcement by the Ford Motor company that supply chain issues would cost an extra $1 billion this quarter, as that could be an indication that auto catalyst demand is still being back by constraints to auto production.
GOLD / SILVER
The trade is anticipating the FOMC’s meeting announcement this afternoon, and with an oversold technical condition and Putin announcing a “partial military mobilization,” the market may be in for some short covering after the FOMC results are released. December gold has been consolidating in a narrow range near contract lows as the world largely expects another 75 basis-point rate increase. Higher rates make it less attractive to hold non-interest-bearing assets like gold, and the strong dollar pulls safe-haven demand from gold as well. Investment interest in gold continues to decline. Anything less than a 75-basis point hike would likely spark a bullish reaction, but even if the Fed meets expectations, it may only hold the market down for a brief time. On a positive fundamental note, China’s imports of non-monetary gold reached their highest levels since June 2018 last month. But despite the oversold status, it is hard to build a case for more than a short-covering rally. Unlike gold, December silver has rejected its September 1 contract low with a modest short covering rally. A bullish reaction to the FOMC meeting could spark a move through resistance and a more substantial rally. The market is short term overbought, however.
Copper prices continue to see coiling action far below last Tuesday’s 3-week high, and they are seeing moderate pressure early today. However, the market has been holding up well considering a negative shift in global risk sentiment over the past 36 hours, as it only sustained a modest loss on Tuesday. The major Chinese metropolitan area of Chengdu has announced that it will relax it COVID restrictions, which has boosted China’s demand outlook, but the PBOC’s decision to hold interest rates steady may not reflect well on their economy, especially with the Fed expected to hike rates today and the BOE expected to do so on Thursday. LME copper stocks have increased for the third straight day; this is the first time that has happened since early July. This may not bode well for copper’s demand outlook, but stocks are still relatively close to last Friday’s 5 1/2-month low.
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