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Precious Metals Remain Vulnerable


Precious metals remain vulnerable from fundamentals & technicals. The bias in gold and silver remains down again today, with a slightly higher dollar renewed slowing/deflationary concerns from the likelihood of a revival of social distancing in the UK and fears that the Fed’s Powell will once again disappoint with a lack of any near term promises of action.


We see the PGM markets as vulnerable again today with yesterday’s washout seeing little in the way of liquidation in open interest and only a modest increase in trading volume. Therefore, the market does not appear to be classically leveled from a technical perspective yet and news from China overnight was nonexistent.


While copper prices could have extended on the downside this morning following declines in Chinese equity markets in-excess-of 1% overnight, the financial press overnight was again touting the potential for increased economic activity into the October Chinese National day holiday. In fact, overnight news touted Chinese total power consumption jumped by 7.7% in August which in turn was the strongest consumption rate in 2 years. However, copper demand prospects outside of China are deteriorating because of the failure to maintain a focus on a US stimulus package and also because of what is expected to be a series of ordered lockdowns in the UK and perhaps in portions of Europe.


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