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FOMC Keeps Pressure on Metals Market


While the gold market has managed to hold above yesterday’s spike low, the charts and classic fundamentals remain in favor of the bear camp. As indicated earlier in the week, it is difficult to ascertain which force is driving gold and silver prices sharply lower with massive energy price declines, hope for Ukraine talks, fears of rising US rates, the potential for Russian gold to flow to the world market from the black market and fears of global slowing from the expanding Covid infection problem in China all adding to the downward bias.


In retrospect, we doubt the massive slide in palladium ($1,115 an ounce) over the prior 5 trading sessions was solely the result of Russian companies indicating they could get supply out of Russia despite the sanctions. However, combining the Russian export news with a rising rate environment, precipitous declines in oil prices and recession fears because of Covid in China, certainly produced a broad bear case. In a potential major positive development overnight platinum ETF holding saw a (relatively) massive inflow of 55,136 ounces for a single day 1.6% gain in holdings.


Not surprisingly, the copper market continued to slide yesterday as infection news from China remained very concerning, and that obviously creates the potential for significant Chinese copper demand losses ahead. While concerns for the Chinese property sector adds to the copper demand threat from China, that influence is tamped down by Chinese moves to support their financial and property sectors overnight.

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