While favorable Chinese economic data to start the week provided copper with some lift, the Chinese economic news overnight should have added even more lift to copper as retail sales gains posted the first year over year gain since the beginning of the pandemic. Furthermore we think the improvement in overall global psychology from this week’s strong equity market start is another impetus behind prices reaching 4-day highs yesterday and that action is likely propel prices to and through contract highs directly ahead.
GOLD / SILVER
Gold prices closed higher in Hong Kong and Shanghai after showing strength in the Indian market. While the declines in the US dollar to start today are not significant, the index did take out yesterday’s low and in-the-process forged a 3-day low. Not surprisingly, gold has started out higher and was likely given some added lift overnight by positive Chinese economic data which could signal an improvement in gold demand from the world’s largest consumer. The December silver contract has forged an upside breakout with a 7-day high already today and should be expected to claw even higher off a combination of spillover support from gold, weakness in the dollar and hopes of Fed action tomorrow.
PALLADIUM / PLATINUM
The charts in the palladium market are pointing higher with the market finally seeing some lift from the prospect of increased demand from China in the wake of news that auto sales in the country last month improved. In other words, demand from the auto catalyst sector is likely getting back on track and that combined with spillover lift from the rest of the precious metals markets should leave the prospect of higher lows and higher highs in place. While the platinum market should draft some support from news that Chinese retail sales expanded last month (jewelry, auto, industrial goods) the market could also draft some support from reports that China is back on a buying spree of rare earth materials which could provide indirect lift for platinum.
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