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Metals Building Consolidation Support


We see the sharp recovery rally in gold and silver prices this morning as a “relief rally” with a small measure of assistance for the bull camps coming from the reversal in the dollar. Apparently, the gold and silver trade think the US Federal Reserve outcome left the path of interest rates unchanged for the near term, with others suggesting a mere tapering of bond purchases will not be effective in battling inflation.


While there was not a rejection of the spike down move in palladium yesterday, the palladium market has bounced aggressively this morning as if sub $1,600 pricing is too cheap. We would not be surprised to see a noted amount of short covering buying, as the net spec and fund short (adjusted for this week’s declines) has likely shattered the previous record net spec and fund short reading! Like the palladium market the platinum market has clearly rejected yesterday’s spike down move.


In addition to an extreme oversold technical condition into yesterday’s low (prices were down $0.28 in 5 days) the copper market has seen a forced shutdown of one of the largest copper mines in Peru because of tensions with the local community. However, the supply lift from the Peru situation is somewhat lost in the wake of an emerging pattern of a rebuilding of daily LME copper warehouse stocks.

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