GOLD / SILVER
While the gold market is showing signs of bouncing this morning, action in the dollar suggests the path of least resistance in gold and silver should remain down today. In fact, the dollar since last Thursday has gained 80 ticks and has managed two consecutive days of very large trading volume, which could suggest the bull camp is formidable. Therefore, strength in gold and silver prices early today is surprising and is likely the result of simple short covering following yesterday’s huge downdrafts.
PALLADIUM / PLATINUM
While the selling in PGM markets yesterday appeared to have its genesis in the gold market, the damage to the charts yesterday sets the stage for a retest of the August lows down at $2,270. Obviously, part of the selling in the palladium market yesterday was the result of renewed strength in the dollar and because of the big picture macroeconomic washout in all physical commodities. While the platinum market avoided aggressive liquidation of the type seen in gold and palladium yesterday, the bias in the market shifts down with macroeconomic uncertainty surfacing at the same time the dollar appears to have returned to uptrend status.
With global equity markets lower overnight, further strength in the dollar and indications that stimulus might not be in order in China, the sharp range down breakout in December copper this morning is well-deserved. The market also fears a decline in Chinese seasonal demand and restricted fabricating rules in China could limit factory buying but a very significant pressure on copper demand expectations is the Chinese crackdown on property holdings.
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