Written Commentary
GOLD & SILVER
With the dollar trading in a very tight range this morning, and gold trading in a very tight trading range early, the trade is poised for a noted reaction to this morning’s US CPI reading. So far overnight international inflation data was generally as expected with most inflation readings elevated versus normal but with several softening from previous results. Obviously, the sharp rise in German CPI is concerning but is discountable as a one-off given the exponential impact from high energy prices on the German economy. While the upside breakout yesterday in October gold enhances bullish charts, today is very likely a major trend decision day for many markets. In the most likely reaction, gold and silver are likely to be lifted in the event US CPI readings are as expected (+0.2%) as that could temper expectations for a large US September rate hike.
PALLADIUM & PLATINUM
With the palladium market forging a higher high yesterday and the platinum market failing to make a higher high, leadership in the PGM markets might have shifted back to palladium. Unfortunately for the bull camp in palladium, yesterday palladium ETF holdings fell by a very significant 5,812 ounces and are now 14% lower year-to-date. Even though the palladium market might not gyrate wildly (as in the gold market) following today’s inflation data, any sign that higher rates are not slowing inflation in the US could result in sharp gains throughout precious metal markets.
COPPER
While Chinese factory inflation fell to a 17-month low last month, consumer inflation jumped mostly from ultrahigh pork prices. Therefore, Chinese inflation readings are slightly negative to copper as are predictions that Chinese August copper cathode production may miss forecast levels because of COVID restriction in a key Chinese smelting city. The COVID restrictions could leave the market very vulnerable to the US macro-economic take-away from US CPI readings this morning. While surging cathode copper prices are likely to lift some Chinese domestic copper product prices, a slowdown in Chinese smelting could result in lower August Chinese imports.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
