Written Commentary
GOLD / SILVER
Obviously, gold reached a moderately oversold condition into the overnight low, with prices forging a low to high bounce of more than $20.00. Perhaps some shorts decided to take profits rather than risk the volatility of the upcoming US CPI report. However, Chinese inflation readings overnight were hotter than expected, indicating the capacity for expanding inflation in an economy perceived to be slowing. Unfortunately for the bull camp, gold ETF sales continued yesterday with a large 266,007-ounce liquidation.
PALLADIUM & PLATINUM
Even though the June palladium contract managed to rise above the Monday high yesterday, prices fell back sharply from that move indicating the trade remains attracted to the $2,000 price level. We are not sure if news of a significant Ukraine offensive in the East undermines palladium from hopes of a quicker end to the war, but even if Russia were to fully withdraw, sanctions might remain in place until a regime change is seen. According to one of the world’s largest palladium trading firms (Amplats) the increase in UK palladium import duties is likely to keep palladium prices at higher levels for longer. While the platinum market has carved out a higher high overnight and appears poised to regain the $975 level in the July contract, the CPI report window is likely to be a key junction for prices.
COPPER
While the copper market managed to rally and take out the Monday high early yesterday, the tide reversed 180 degrees and the charts shifted in favor of the bear camp again. Certainly, fears of slackening Chinese copper demand continues to weigh on copper prices, but it should be noted that Shanghai reported no new infections overnight and the current average daily Chinese infection count is only 386! In other words, the Chinese government remains committed to a “zero Covid” policy and while that aggressive policy is hurting the Chinese economy in the short term it is starting to provide positive results. A recovery in iron ore prices overnight and news that talks with Peruvian communities (who are blocking access to mining operations) have failed, provides copper with some fundamental support today.
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