Written Commentary
COPPER
With the reversal from the upside breakout and highest price since May 11th was extended overnight with a lower low, the copper trade feels like it is concerned about a US rate hike next week and is becoming short-term impatient waiting for a Chinese stimulus package. However, current copper demand expectations remain wounded from this week’s Chinese trade data and from predictions from economists that copper is signaling slowing in the global economy. On the other hand, the charts present a very different and bullish formation with periodic higher highs and higher lows. In the short-term, the inability to hold early gains in the face of record Chinese May copper concentrate and copper ore imports highlights there are some doubters on the prospect of a Chinese stimulus surfacing in the near term.
GOLD / SILVER
The developing pattern on the dollar charts with 4 consecutive lower highs and 3 consecutive lower lows should provide hope for gold and silver bulls ahead, especially if today’s US jobs related data points to a soft economy. Unfortunately for the bull camp investment signals for gold remain bearish. Fortunately for the bull camp in silver yesterday, silver ETF holdings broke a 6-day pattern of outflows with an inflow of 857,144 ounces. Going forward, the bull camp in the gold and silver markets will need to see a positive price reaction to US weekly claims data to stem the liquidation pattern and allow the trade to respect consolidation low support levels of $1950 in gold and at $23.32 in silver. Given the aggressive washout yesterday, today’s jobless claims data take on more importance than usual. In retrospect, the silver charts survived the washout in gold and have extended a pattern of higher lows as if prices could regain and settle above $24.00. A minimally supportive technical signal is that yesterday’s gold washout was forged on a pickup in trading volume, potentially signaling many weak handed longs were forced to the sidelines.
PLATINUM / PALLADIUM
Despite a bullish longer-term platinum price view from Bloomberg Intelligence, which suggest the platinum market has a bullish risk skew with the market returning to a deficit after years of surplus, prices this morning remain pinned to yesterday’s spike low. Stepping back the rotation from palladium to platinum in auto catalyst production and improving investment demand there is a solid bullish foundation supporting bullish long-term views. In the meantime, the $1,000 level could be both a technical and fundamental support junction. As we have documented many times the palladium market has the exact opposite spec and fund positioning as platinum with palladium futures and options holding a very large net short and with investment interest in palladium ETFs the strongest in the precious metal markets.
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