GOLD / SILVER
As we have been indicating for months, the precious metals markets will not easily transition into flight to quality harbors. With a return to activity restriction rules in a broadening area of Europe and in the US the fear of economic slowing and commodity demand destruction are front and center again. In fact, overnight it was noted that global industrial demand for gold declined by 9% in the 3rd quarter relative to year ago levels which is clear evidence that gold is a commodity facing classic negative demand.
PALLADIUM / PLATINUM
With the palladium market already in the midst of a technical breakdown on its charts late last week, a failure at consolidation low support of $2,302.60 yesterday and aggressive spillover selling pressure from the negative environment for most physical commodities, a quick slide down to the September low of $2,184.80 is likely directly ahead. On one hand, the January platinum contract ranged down sharply yesterday but rejected the lows aggressively as if levels just above $850 were some form of support. Even though the platinum market was able to sidestep yesterday’s broad-based big picture washout in commodities, a continuation of yesterday’s conditions should throw January platinum down to 30-day consolidation low support level at $841.70.
With an 1800-point decline in the Dow Jones industrial average since last Friday, strength in the dollar a rising wave of headwinds for the economy from activity restrictions and reports from a copper mine overnight that they will reach annual production targets pressure on prices is likely to return today. However, prices are showing some slight recovery action this morning following predictions that refined copper demand in China will continue to pick up and could accelerate by as much as 5% next year.
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