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Flight to Quality Lifts Metal Prices


With an upside extension in the dollar to start the new trading week, it is very surprising to see the gold market trading $7 higher and silver trading $0.15 higher. Perhaps the gold and silver trade are benefiting from a measure of flight to quality buying off fears that China’s Evergrande real estate giant is poised to default as some have labeled that company as a Chinese “Lehman”.


Apparently, the palladium market is attempting to build a support level on the charts, with prices stubbornly rejecting sub-$2,000 pricing in each of the prior 3 sessions. Sentiment-wise, we can understand a bottom in a market which saw predictions of a “death cross” on the charts recently and a market that has possibly fully embraced disrupted auto production into next year. While the platinum market failed at the $950 level last week on active trading volume, the market has apparently managed to build a shelf above $921 but has been restricted by staunch overhead resistance at the $950 level.


With a partial Chinese holiday, a sharp fresh lower low for the move early in the Monday Asian trade and general economic/financial contagion concerns in the headlines, the path of least resistance in copper is down. In fact, projections of deflation and/or stagflation have surfaced recently, US and Chinese infections remain a problem, and the fear of a financial contagion hit for the Chinese economy are major negative for the copper market.

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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