Written Commentary
GOLD & SILVER
With a fresh higher high for the move in the dollar, a fresh lower low (8-day low) in August gold is not surprising. We suspect the dollar is garnering interest from economic confidence derived from a pair of US Federal Reserve speeches overnight discounting the prospect of recession. However, Fed dialogue remains squarely on track to continue hiking rates, with the Cleveland Fed President indicating she will back a 75-basis point rate hike in July if the economy maintains its status. In short, economic uncertainty has been tamped down, interest rates are expected to continue to rise, and the dollar is seemingly refocused on attractive yields, instead of flight to quality. Therefore, gold and silver are presented with several bearish fundamental factors and have forged breakdowns on their charts
PALLADIUM & PLATINUM
While the PGM markets are not overly sensitive to the prospect of minimal PGM supply disruptions in South Africa, attacks on power plants (from protests) are expected to cause “record” outages and that likely providing palladium with some of its gains over the prior 4 trading sessions. Certainly, the markets have not shown concern for a notable disruption of Russian PGM supply flow, but sustained power outages and from protests arising from wage/political unrest in South Africa could spark an influx of speculative long interest. Like palladium, the platinum market has not shown sensitivity to the Russian situation and the market has shown only tacit concern for supply disruptions from South Africa in the event of sustained blackouts. On the other hand, platinum has forged noted gains this morning in the face of a large daily outflow from ETF holdings of 4,142 ounces which in turn puts the year-to-date holdings 6.9% lower.
COPPER
Apparently the bloom has come off the wave of Chinese economic optimism, US consumer confidence plummeted yesterday, global equity markets are under fresh pressure, very hawkish US Fed dialogue has surfaced again, troublesome inflation readings were released from Spain this morning and an upside breakout in the dollar clearly justified the sharp pulse lower trade in copper overnight. Adding into the negative bias in copper today are reports that despite a truckers strike and protests in Peru copper mines are operating “normally”.
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