Written Commentary
GOLD & SILVER
With gold pulling back overnight in the face of stabilization in the dollar, the inverse correlation between the two markets continues. Going forward, we expect outside market action to continue to support the bull case but emphasize the fuel behind the rally is not based on bullish internal gold market fundamentals. Nonetheless, a long list of flight to quality storylines are still present in the forms of intensifying fighting in eastern Ukraine, economic uncertainty from soft global scheduled data, lingering fears of a setback in the Chinese Covid battle and unrelenting weakness in crypto currencies. On the other hand, uncertainty that could apply pressure to gold and silver prices today is this afternoon’s US Fed Beige Book release.
PALLADIUM & PLATINUM
Despite strength in the dollar and spillover pressure from lower gold prices, the palladium market has spent most of the overnight trade in positive territory. Internal fundamental news on the PGM complex in the last 36 hours has been virtually nonexistent, but the bear camp has received assistance from a bearish forecast from the primary Russian PGM producer. As indicated earlier this week, Russian Norilsk projected the world palladium deficit would shrink from 300,000 ounces to only 100,000 ounces. As in the palladium market, platinum market fundamental news yesterday was virtually nil. However, also like palladium, the platinum market was undermined by a bearish supply and demand forecast from Russian mining giant Norilsk.
COPPER
In addition to the overbought condition from the last 2 weeks rally, the copper market is encountering fresh selling off reports of new infections from tightly contained areas in Beijing. While the trade generally remains confident in China’s ability to unwind activity restrictions in Shanghai, traders should keep in mind that the Chinese government maintains a “Zero Covid” policy and it is unclear with 14 new infections in Beijing if there will be fresh isolation restrictions. The market might also be under pressure because of renewed efforts to solve conflict between a Peruvian mining facility and surrounding communities.
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