GOLD & SILVER
While the pendulum of precious metal market sentiment reversed to the downside yesterday sentiment has rebounded this morning and the trade will be presented with a key inflation reading capable of setting upcoming trends. Not surprisingly, renewed capital flow toward the US dollar (from a revival of even higher terminal rate fears) following a better-than-expected GDP report robs the bull camp of its primary theme of a falling dollar. However, with a very critical US inflation report scheduled for later today (PCE), traders should expect significant but compacted volatility early today, as a surprise decline in inflation pressures would likely result in very significant declines in the dollar.
PALLADIUM & PLATINUM
Even though the March palladium contract extended a consolidation support pattern on its charts yesterday, the market remains fundamentally vulnerable. Furthermore, March palladium prices this morning have forged a fresh downside breakout on the charts and the large inflow to palladium ETFs from earlier in the week has not been confirmed by large subsequent inflows. The platinum charts have turned distinctly negative with long interest in the PGM markets potentially shifting to palladium and away from platinum.
Once again we are impressed with the copper market’s capacity to respect the $3.75 level in the face of reports of extreme shortages of oxygen and hospital beds in China. However, weekly Shanghai copper warehouse stocks declined by 9,472 tons facilitating the widely held market concept that supply inside China remains very tight. In fact, another measure of physical copper supply inside China indicated that major Chinese copper market supplies reportedly declined 18,100 metric tons from last Friday. It should also be noted the Indonesian government is apparently moving forward with its efforts to place a ban on exports of copper concentrate.
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