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Metals Liquidation Should be Limited


With the dollar this morning extending yesterday’s recovery/rejection of a new low for the move and treasury yields ticking higher, the gold and silver markets face bearish outside market forces to end the trading year. With the US economic report schedule lite (Chicago Purchasing Managers Index) ranges are likely to be restricted which could favor the bull camp as gold is short-term overbought from the last three-week’s rally of $100 and given outside market pressure today the funds may feel pressure to bank profits following the market’s reaction to the lone US data point. Not surprisingly, the silver market has significantly failed this morning after a very poor seven day low close yesterday.

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With both LME and Shanghai copper warehouse stocks increasing, and copper prices currently trading nearly $0.20 above the early December low year, position squaring is likely to present profit taking selling. The bull camp might be prompted to bank profits and move to the sidelines in the wake of overnight headlines indicating the Chinese and Hong Kong stock markets were the worst performing global markets with declines exceeding 10%. In fact, the losses would have been more severe in China without this week’s sharp recoveries which resulted in the best week of the last five months!


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