Written Commentary
GOLD / SILVER
While the early action in gold fails to telegraph a preferred direction on the charts, we give the edge to the bear camp as fears of slowing physical demand for gold from a nagging Asian infection problem. In fact, demand fears were given added credence this morning by evidence that Hong Kong gold exports to mainland China in May fell precipitously. Gold might see additional pressure from a Goldman analyst suggestion that inflationary pressures are likely to be transitory, as is the company line of the US Federal Reserve.
PALLADIUM / PLATINUM
While last week’s gains in palladium were forged on sharp declines in open interest and softening trading volume, the market has seemingly rejected pricing down at $2,500 and now appears to be attempting to build a shelf of support at $2,600. Like the palladium market, the platinum market also forged an upside breakout on its charts with little in the way to justify the move from a fundamental perspective.
COPPER
With September copper last week stalling around $4.33, following a noted short covering bounce, the trade appears to be anticipating soft Chinese PMI data late Tuesday which in turn could signal a moderating of the Chinese recovery pace. In fact, expectations for the midweek release of Chinese nonmanufacturing PMI for June call for a decline of almost 3 points with manufacturing PMI also expected to moderate with a reading near the growth/no growth line of 50.0.
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