Written Commentary
GOLD & SILVER
Even though there is debate on the take-away from the release of the US FOMC meeting minutes from early May, the gold trade seems to favor the view that the Fed remains entrenched in its stance to post two sequential 50-basis point hikes, but other rate hikes might be delayed. On the other hand, the US Dollar Index forged a fresh downside breakout down this morning and US scheduled data this week has been anemic which has increased recession fear and cast doubt on unrelenting US tightening. In another notably positive development, Indian central bank gold reserves posted a 9.4% gain on the year (+65 tons) that ended in March.
PALLADIUM & PLATINUM
While the palladium market this morning has a positive track to start, we expect significant resistance at $2037.00 to slow or halt the attempt to rally. However, we are surprised that PGM prices did not fall precipitously yesterday in the wake of news that Anglo-American signed a 5-year wage and benefit deal with 4 major South African mining unions. While palladium has not shown sensitivity to the ebb and flow of economic data recently, today’s US PCE reading could have a beneficial impact if readings show a slight tempering of price pressure as that in turn adds to ideas that the Fed may not hike rates as much as plotted out by the open market committee. By rights the platinum market should have suffered more selling pressure than palladium yesterday from the news of a 5 year South African wage deal between Anglo-American and key unions. In fact, the platinum market managed a higher close and a higher high this morning suggesting the market isn’t really focused on supply issues.
COPPER
Given a rather stark warning of slowing from the Chinese premier (seemingly absent from official domestic Press coverage) and a very disappointing Chinese corporate profits result, it is very surprising to see copper trading higher this morning and at times sitting $0.10 above yesterday’s low. However, the Chinese Premier reportedly compelled local officials to act quickly and decisively to prevent a contraction of the economy in the 2nd quarter and for some that cushions demand fear. For some copper traders the comments suggest the Chinese are poised to support their economy.
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.
