Written Commentary
GOLD & SILVER
While the gold market has managed some positive early action today the gains are minimal and appear to be a simple technical pause before prices continue downward motion. With three straight days of aggressive range up action in the dollar and several weeks of higher yields in US treasuries, the downside extension in gold and silver yesterday was fully justified. Clearly, recent very upbeat gold jewelry/import figures from China and India are being heavily discounted with the trade instead relying on big-picture macroeconomic outside market influences for direction.
PALLADIUM & PLATINUM
Like gold and silver, the PGM markets are higher today in what is likely a simple technical bounce. With a massive washout in September palladium to the lowest level since July 22nd and the market falling through several critical retracement support levels (from the July and early August rally) the bull camp should be severely deflated. Investment demand for palladium remains very soft with palladium ETF holdings at a year-to-date decline of 15%! We suspect both palladium and platinum are undermined by fear of reduced demand for vehicles in the face of signs of slowing and sharply reduced disposable incomes from food and energy inflation.
COPPER
Apparently scorching heat in China has resulted in a reduction of metals output with cash premiums firming and copper stockpiles drawing down. In other words, a reduction in supply is for the time being matching and perhaps slightly overcoming soft demand conditions inside China. The copper market was fortunate to have respected consolidation support at $3.60 yesterday given widespread recession concern, a sharply higher US dollar and the potential for China to reduce industrial output further because of the need for power for significant cooling in blistering hot portions of Southwest China.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
