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Inflation Evidence Mounts


Despite a stronger dollar and modest declines in crude oil prices, the gold market sits near the highest level since March 14th in the early going today. The bull camp is obviously helped by another round of international inflation readings overnight. In fact, inflation evidence came from New Zealand, Great Britain, and Spain. We suspect that gold and silver are partially undermined because of soft Chinese import and export data as that insinuates a soft economic foundation. As indicated yesterday, we see the gold and silver gains this week as pure inflationary gains which are impressive considering they have been forged in the face of a litany of hawkish US Federal Reserve statements.


With the National Union of Mineworkers and the AMCU union expected to join forces to secure higher wages and better fringe benefits, South African gold, platinum, and palladium production is threatened, and prices should be underpinned. While platinum did not see support from the potential for strikes at Sibanye-Stillwater platinum mining facilities in South Africa, the market remains just above solid support of $950 on the charts.


As indicated already, Chinese daily infection counts remain above 24,000 (average daily), LME copper warehouse stocks continue to climb (+2,650 tons overnight), and Chinese March copper imports (released overnight) were reported to be down 8.8% from your ago levels and that gives the bear camp a load of ammunition. In additional negative macroeconomic orientated news, overall Chinese import and export data came in softer than expected which in turn should dampen copper consumption projections.

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