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Back And Fill Action in Metals


Despite a significant reversal slide in the dollar overnight, gold, and silver prices start the trade today under noted pressure. In addition to a modest overbought technical condition, the precious metal markets are being buffeted by a rising chorus of central bank rate hike threats. However, we are becoming convinced that this week’s initial gains in gold and silver prices were the result of bona fide inflation hedge buying. In fact, gold and silver prices managed to rally despite a series of contract highs in the dollar and a general market discounting of a record jump in US producer prices last month.


Overnight Goldman suggests banning of 2 Russian refineries from the world’s 2 major palladium/platinum exchanges is likely to have limited impact on prices because most sales are direct to users and consumers. Confusion on whether labor unions in South Africa have served notice of a secondary strike at platinum mining facilities has seemingly robbed the PGM markets of fresh speculative buying interest from the supply side. While the market doubts a sustained shutdown of South African Sibanye-Stillwater platinum mining operations, that threat is present and should discourage fresh sellers.


Despite a record daily infection count in Shanghai above 27,000, copper prices are tracking higher this morning because of hope for a Chinese stimulus effort.  Certainly, the copper market has been aware of the threat of slowing Chinese copper demand from lockdowns for several weeks and there is an ongoing pattern of rising LME copper warehouse stocks.

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