Written Commentary
GOLD / SILVER
With the February gold contract in the early going today forging a 5-day high and approaching the 200-day moving average at $1796.15 the bull camp has a foothold. In fact, US gold prices are tracking higher despite a weaker track in from Chinese gold prices overnight. While gold and silver traders are already looking ahead to the overnight Chinese inflation reports for November, and ahead to the US CPI port on Friday, near term action is likely to be determined by oil prices, equity prices and the dollar.
PALLADIUM / PLATINUM
We are highly skeptical of the palladium market’s rally yesterday as the gains appear to be a simple sympathy rally with other physical commodity markets and the gains were forged on extremely low trading volume. However, favorable Chinese import/export data should be supportive of palladium going forward, as that suggests the economy is growing and Chinese demand for cars could also be set to improve. While the platinum market also benefited from the broad-based risk on vibe yesterday, the gains were undersized and unimpressive in a fashion that suggests the bull camp is unmotivated.
COPPER
With the copper market into the high yesterday forging a low to high rally of $0.19 in just 4 days and carving out those gains on declining volume and open interest, it would not appear that the bull camp has buyers waiting in the wings. On the other hand, LME copper warehouse stocks are 1,700 tons away from a 16 1/2 year low, Chinese copper cathode production has expanded and there continues to be a general risk on vibe in the marketplace.
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