Written Commentary
GOLD / SILVER
We get the sense that gold and silver are beginning to factor in the potential for inflation and have benefited from beginning of the year allocations. Certainly, gold and silver benefited from the latest fresh downside breakout in the dollar but with gold and silver holding all their gains in the face of a mid-day recovery in the dollar yesterday something other than currencies appears to be lifting prices.
PLATINUM / PALLADIUM
The PGM markets started the week/year out with prices diverging, with platinum soaring and palladium rejecting noted gains and reversing sharply to the downside. We think traders will continue to be long platinum and short palladium, but in the near term, we think the markets will come back into directional sync especially if gold and silver show consistent gains ahead.
COPPER
With copper prices flaring sharply higher on Monday and falling back from that spurt higher it would appear as if $3.60 is some form of key pivot point. Certainly, weaker than expected Chinese PMI data yesterday is a possible sign that Chinese copper demand hopes might have become overly optimistic and that alone could temporarily knock the legs out from under copper prices if macro sentiment deteriorates again today.
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