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Expanded Volatility For Metals


We get the sense that gold and silver are beginning to factor in the potential for inflation and have benefited from beginning of the year allocations. Certainly, gold and silver benefited from the latest fresh downside breakout in the dollar but with gold and silver holding all their gains in the face of a mid-day recovery in the dollar yesterday something other than currencies appears to be lifting prices.


The PGM markets started the week/year out with prices diverging, with platinum soaring and palladium rejecting noted gains and reversing sharply to the downside. We think traders will continue to be long platinum and short palladium, but in the near term, we think the markets will come back into directional sync especially if gold and silver show consistent gains ahead.


With copper prices flaring sharply higher on Monday and falling back from that spurt higher it would appear as if $3.60 is some form of key pivot point. Certainly, weaker than expected Chinese PMI data yesterday is a possible sign that Chinese copper demand hopes might have become overly optimistic and that alone could temporarily knock the legs out from under copper prices if macro sentiment deteriorates again today.

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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