GOLD / SILVER
Clearly, the markets are not supported by weekend developments in Gaza and with a thin US economic report slate today, the primary focus will likely be on an afternoon speech from the Feds Harker. While the US intentions to contain the Middle East crisis are laudable, many times those types of efforts prove fruitless. Surprisingly, evidence of China’s central bank increasing liquidity in their banking system has not cushioned their equity markets indicating ebb and flow of from the Chinese currency is not a primary focus of the metals trade. If anything, the action in the Chinese currency this morning is slightly bearish to gold. After erosion in gold ETF holdings since the first week of September, recent declines have become less notable but that could be the result of fresh buyers simply offsetting long liquidators. The gold and silver markets should have tailwinds from last week’s developments as the Fed’s Harker indicated the US Federal Reserve may be “done” hiking interest rate. Surprisingly, the gold and silver markets managed gains last week despite a five-day high in the dollar, perhaps because of strength in treasury prices last Friday. However, outside market forces are likely to continue to foster volatility in the precious metal markets, however, good bull markets are capable of shifting focus when necessary.
COPPER
While signs of increased liquidity from the Bank of China this morning lends support to copper prices this morning, bearish price projections from Citigroup emboldens the bear camp. Furthermore, talk of improved seasonal demand from China is also offset by last Friday’s massive jump in Shanghai copper. Similarly, last week’s supportive move by the Chinese government to support the big four Chinese banks is lost on the trade early this week as Chinese stock markets traded lower today. Reports of level copper premiums for sales in Europe from Codelco and reports of declining copper premiums from the company into the US clearly offsets aggressive Chinese efforts last week to sharply reduce copper premiums paid next year.
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