Written Commentary
COPPER
Copper prices spent last week in a tight consolidation zone, but it has broken out to the upside overnight with a gap-higher opening and a sharp rally. March copper finished Friday with a strong gain and a third positive week in the past four. It has reached its highest level in six weeks and is on-track for its first close above the 200-day moving average since June. Chinese equity markets had a positive start to the week following news than more Covid restrictions are being relaxed, and that should provide copper with carryover support.
GOLD & SILVER
China has further reduced its Covid protocols, and this gave the gold market a boost overnight on ideas it would support demand from the world’s largest consumer of gold. Starting in January, inbound travelers to China will no longer be subjected to quarantine. February gold was higher overnight, advancing Friday’s gains but still inside Thursday reversal lower. The market responded positively on Friday to the release of the November PCE. The PCE is often referred to as the Fed’s favorite inflation reading. It was up 0.1% in November (+5.5% year over year) after climbing 0.4% in October (6.1% annually).
PALLADIUM & PLATINUM
March palladium gapped higher overnight and traded to its highest level since December 16. China’s further relaxation of Covid policies may have given a lift to the market on ideas it would boost the auto sector, which is a key source of palladium demand. This comes after the market rejected a downside breakout on Friday. The platinum managed money position is coming off its largest net long since March, but it is still well below its record of 53,000+ from January 2020. Palladium positions are about as close to neutral as can be.
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