Written Commentary
GOLD & SILVER
While global equities are throwing off positive macroeconomic vibes early, equity markets are higher despite the risk of recession being ratcheted upward by economists. The precious metal markets are likely on edge because of the upcoming testimony from the US Federal Reserve Chairman on Wed. In our opinion, the trade will be watching for clues on the Fed’s intention or need to raise rates even quicker than the markets have already factored. The gold market is walking a “tight rope” with economic growth faltering in the face of rising rates, and it will be interesting to see if recession pressures gold prices or economic uncertainty lifts gold prices.
PALLADIUM & PLATINUM
In addition to September palladium extending its respect of support at $1800 over the prior 5 trading sessions, the contract has rejected the previous day’s close early today and therefore the charts provide a cushion for prices. Furthermore, the latest COT positioning report showed a new record spec and fund short positioning in palladium. Like the palladium market, the July platinum contract rejected $925 overnight and continues to build a consolidation around the $925 level.
COPPER
With the copper market smashing through key support from the August 2021 lows overnight, the trade continues to factor in the prospect of serious slowing in China. Adding into the downward bias is an unfortunate combination of growing recession fears and signs that the US Fed will continue its 75-basis point rate hike regime until inflation readings soften. The Fed has made it clear that their primary focus is containing inflation and not supporting equities and or the job market. While many economists suggest the chances for inflation are 50% or less the copper market is moving to factor in significant demand losses.
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