Written Commentary
GOLD / SILVER
With the gold market short-term overbought and the dollar index making a new high for the move, this morning’s corrective action is justified. While surging oil prices should be stoking inflationary prospects, we think gold and silver have primarily been lifted by flight to quality buying from the Ukraine saga and not because of the inflation story.
PALLADIUM / PLATINUM
With palladium tracking higher this morning in the face of weakness in gold it is clear the threat against palladium supply from international sanctions remains the key driving force for prices. With Russia’s Nornickel reportedly responsible for up to 40% of PGM supply to the world, the potential for a full-scale fighting has fostered fears that Western countries and private sector entities will disrupt and close Russian palladium exports. While the platinum market rallied yesterday, the gains were unimpressive and indicative of a market not on the tip of the supply threat. Obviously, Russia is also a supply source for platinum, but the speculative focus remains on palladium.
COPPER
We remain highly suspicious of the sharp rally in copper prices as we see the market as a classic physical commodity facing highly uncertain demand conditions. However, a long list of commodity markets is rushing to factor in the prospect of embargoes and or supply chain disruptions of Russian physical materials. It should also be noted that Chinese manufacturing PMI, nonmanufacturing PMI and the Caixin manufacturing PMI all came in positive thereby boosting copper demand expectations.
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.
