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Silver Benefits From Inflationary Expectations


While gold and silver are holding up in the face of another new high in US treasury yields overnight and holding up against a new high in the dollar, those outside market influences are limiting the metal markets capacity to rally. Overnight reports that Russia might have used chemical weapons have not been verified but have likely provided gold and silver with part of their early lift. A potential negative came from the Chicago Fed President (a dovish member of the Fed) yesterday who indicated that the subject of accelerated pace of interest rate hikes is now worth debating. Early in the Monday trade, it appeared gold and silver prices were benefiting from “classic” inflationary expectations and a test of that theory will be seen this morning following US Consumer Prices for March.


While not a direct bullish influence the National union of Mine Workers and Association of Mineworkers and Construction Union have waged a strike against Sibanye’s gold production for over a month and now in a solidarity move, workers at the company’s platinum group metals operations at Rustenberg and Marikana have walked off the job. The additional strike involves 35,000 workers. Further tightening of physical supply was seen yesterday with the NYMEX following the lead from the London Metals Market by moving to ban two Russian PGM refiners from trading. While the platinum market benefits indirectly from the banning of two Russian PGM refiners from two major exchanges, the market is not in a sensitive supply-side posture.


While the copper market surprised the trade yesterday with a sharp range down failure, and bullish sentiment was fractured in the process, the copper market forged a double low on the charts overnight in a fashion that might signal a short-term oversold condition. Obviously, another city lockdown in China hits right at heart of copper demand hopes. Fortunately for the bull camp, LME copper warehouse stocks broke the recent pattern of inflows, with an outflow of 1,250 tons overnight.



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