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Fear of Deflationary Conditions Weighs on Prices


The razor’s edge between flight to quality interest and deflationary slowing selling in gold and silver extends into another trading week. Obviously, the surge of omicron infections favors the deflationary selling side of the equation to start the new trading week. On the other hand, with equities showing some pockets of strength overnight deflationary sentiment is not universal.


The palladium market did manage a fresh higher high for the move and the highest price since November 23rd overnight in a fashion that suggests it could delink from classic physical commodity market status. We suspect the PGM markets will continue to draft interest from the potential for a boycott of Russian exports in the event of an incursion of the Ukraine and/or if Russia implements an export ban of natural gas through pipelines flowing toward Europe in the depths of the winter. While the platinum market also forged a higher high overnight, it has reversed aggressively and as of this writing was trading nearly $20 per ounce below its initial high.


As in several other physical/industrial commodity markets the March copper contract early today is tracking near its 200-day moving average as if attempting to make a longer-term trend decision. Obviously, the promise of additional Chinese government support for their economy is a major assistance to the bull camp early today.

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