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Despite Record EU Inflation, Gold Tracks Lower


While the gold market finished the quarter with impressive gains, the gold market has reversed course aggressively this morning following record euro zone inflation (7.5%), sharp gains in global interest rates overnight and from moderate strength in the US dollar. However, gold is likely seeing pressure from soft Chinese manufacturing PMI data overnight.


With the palladium market forging another higher high this morning (4-day high) and news that Russia conscripted 135,000 soldiers, sentiment toward palladium has shifted bullish. With a lower high and lower low yesterday in July platinum and significant gains in profits by a South African platinum mining company, the platinum market has more bearish fundamental forces in place than supportive forces.


While LME copper warehouse stocks continued a recent pattern of inflows overnight (+2,575 tons) that bearish news is offset by a weekly decline in Shanghai copper warehouse stocks of 8,934 tons. In retrospect, we see the range up reversal action from the Wednesday high justified by this week’s general pattern of rising LME copper warehouse stocks, but also because of escalating Chinese copper demand fears.

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