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Declining Flight to Quality


Not surprisingly, the gold market is tracking lower today following a deflation of fear from the Evergrande default threat after the company settled its interest payments on a domestic bond. Therefore, seeing gold fall back this morning is justified but the market is likely seeing some cushion from news that the PBOC injected liquidity into the markets to the tune of 160 billion yuan.


With an analyst indicating he sees no end in sight to the global semiconductor shortage, a record net “Spec” and fund short in palladium and negative charts, the path of least resistance in palladium remains down. In fact, projections are that the US manufacturers will produce 1.2 million vehicles less than expected this year because of the chip shortage. Certainly, the palladium market is oversold with the net spec and fund short holding near record levels and the market forging a 3-day high to low washout of $252.


With the Evergrande crisis temporarily placated, Chinese markets reopening from holiday, iron ore prices jumping in China, ongoing declines in daily LME copper warehouse stocks and positive early global equity market action, the path of least resistance in copper is up to start.

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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