Written Commentary
Bear factors dominate
GOLD & SILVER
With an upside breakout above the 107 level in the dollar putting the index at the highest level since July 18th it is not surprising to see October gold post a lower low and approach the $1750 level this morning. In addition to pressure from a strengthening dollar, gold has also encountered fresh hawkish dialogue from the Fed with two different members voicing interest in a 3rd straight 75 basis point rate hike next month. The main takeaway from the FOMC minutes appears to be that we can expect more rate hikes and that they could be aggressive.
PALLADIUM & PLATINUM
Encouraging data on the US labor front and from Philly Fed business activity index present a more optimistic picture on the economic front that could benefit automobile purchases and therefore auto catalyst demand. September palladium sold off early this week on a set of poor economic data points from China, but it has held up better than gold, silver, or platinum in general. The platinum market failed to hold a key support level of the rally off the summer lows that the other precious metal markets didn’t.
COPPERWith September copper building a consolidation zone above $3.5460 this week (with 2 aggressive rejections of that level) and a significant 25% week over week decline in Shanghai copper warehouse stocks the bull camp has the initial edge. The weekly decline in copper stocks at the Shanghai exchange was 10,606 tons leaving stocks at only 31,205 tons! Copper prices are approaching their first close above the 50-day moving average since early June ($3.6335 for today’s close) but will need to see positive developments from China early today to have a positive weekly result.
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