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Action in Metals Dictated by Dollar


With an extremely active scheduled report slate today, gold and silver are likely to experience significant knock-on impacts from the dollar. On one hand, February gold managed a 6-day high yesterday and held nearly all this week’s gains. On the other hand, without a declining dollar, the bull camp is without a strong bull case. The action in silver prices yesterday was impressive with the trade holding within striking distance of 8-month highs and the rally on Tuesday forged on a significant increase in trading volume.

Gold bar


With hope for Chinese property sector assistance, risk on sentiment flowing from equities and a 5,070-ounce inflow to palladium ETF holdings yesterday we expect consolidation low support at $1660 in March Palladium to firm. In fact, from a technical perspective, the palladium market this week has arrested the sharp downside action from last week, with the action over the past 36 hours of trade. While the platinum market has also managed to build consolidation support on the charts, the market lacks fresh bullish fundamental news to inspire the restart of the recovery off the Tuesday low.


Clearly, the 5-day high early today was the result of increased chatter of PBOC assistance/stimulus for the Chinese property sector and the Chinese economy at large. However, the market might have benefited from news that mining giant BHP Group Ltd. made an offer to purchase Australian copper producer OZ Minerals for $6.4 billion. While the overnight decline of 250 tons in LME copper warehouse stocks is insignificant, stocks have declined 4 straight sessions and have declined in 15 of the past 18 sessions. Signs of lingering tightness in the Chinese copper market were on display overnight with spot premiums for #1 copper cathode in Shanghai remaining very high.

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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