Written Commentary
GOLD / SILVER
The gold and silver markets are obviously benefiting from the uncertainty generated by talk of a new South African coronavirus strain that is thought to be more resistant to current vaccines. In addition to economic uncertainty, precious metal markets will likely be lifted by ideas that further virus problems will push back tightening and, in some cases, could allow for fresh stimulus.
PALLADIUM / PLATINUM
While palladium is under some minimal pressure to start today seeing platinum trade higher indicates to us that spread liquidation is taking place. However, the path of least resistance should be down in both palladium and platinum, with palladium severely damaging its charts overnight with a breakout of a 2-day consolidation low and a piercing of the psychologically important $1800 level. Surprisingly, the platinum market has not only held above last week’s consolidation low but has taken out the Wednesday highs and even tested the $1,000 level.
COPPER
Not surprisingly, the copper market has seen a 180 degree reversal after forging a 32-day high. Clearly, the outlook for physical commodities took a significant downtrend over the past 36 hours following the discovery of a new Covid variant which some fear is resistant to current vaccines. While the new variant might not be resistant, it is too early to tell and therefore an overbought copper market (from a $0.31 rally 6-day rally) was vulnerable from both technical and fundamental perspectives.
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