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Temporary Bounce in Metals Risk-On


We are a little surprised to see the gold market trading positive this morning in the face of another contract high move in the dollar, news of a 38.7% decline in Chinese net gold imports through Hong Kong and given the broad-based risk on environment in global equities. However, seeing slightly higher precious metal and commodity prices might be proof that the primary driving force for many commodities for now is the recently developing threat of slowing. The World Gold Council indicated that total gold supply declined  by 6% in the quarter due to lower mined output.


While the palladium market continues to grind slowly higher in the face of weakness in other precious metal prices, the palladium trade is not giving off a consistent bullish focus or theme. Therefore, more sideways chop is expected but the downside might be limited once nearby palladium prices fall to $1,850 which is the level of prices just ahead of the Russian invasion.


Despite another increase in daily LME copper warehouse stocks of 1800 tons, an upward adjustment in a 2022 copper production forecast from Glencore, new contract highs in the dollar and news that the Peruvian government has removed protesters from a shuttered copper mine, copper prices have managed to remain near unchanged. Furthermore, the copper market has also constructed a consolidation pattern over the prior 4 trading sessions, thereby moderating what was extremely negative charts at the start of the week.

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