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Metals Market on Corrective Track


Not surprisingly, gold prices have setback this morning after yesterday’s aggressive run up. On the other hand, the April gold contract did make a higher high overnight extending the uptrend technically. While gold prices over the last several years have not had a good track record responding to flight to quality events with persistent price gains, the Russian/Ukraine situation appears to be attracting hedgers and speculators. Certainly, the silver market has not joined in with recent inflation inspired rallies in other commodity markets and it has barely responded to the current flight to quality situation. Nonetheless seeing March silver climb above a 10-month-old downtrend channel resistance line could signal a reversal of a long-held downtrend.


We did not need to look at the quote screen this morning to know that palladium would be under pressure this morning following revelations that the US and Russia had agreed to discuss Ukraine next week. Therefore, a return to the middle of the last 5 weeks consolidation zone is justified especially if there is any sign of Russia deescalating on the ground. For those looking for a cheaper long entry into the prospect of extremely tight PGM supply conditions, the platinum market has only recently responded to the supply threat, and as of this writing remains below four-month highs and perhaps even more importantly prices have held impressively near the $1,100 level overnight despite the potential for a diplomatic solution.


We are somewhat surprised copper prices are not tracking higher this morning following a slight moderating of tensions in the Russian Ukraine situation. However, Shanghai copper stocks have posted a massive weekly inflow for the 2nd week in a row of 29,728 tons. Countervailing the more than doubling of Shanghai copper stocks over the past 2 weeks is a continued decline in LME copper warehouse stocks.

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