Written Commentary
GOLD / SILVER
While gold and silver are currently embracing flight to quality buying interest because of fears of slowing, too much slowing fear and or disinflation chatter could begin to erode the bull case. On the other hand, seeing gold and silver stand up in the face of a 50-basis point overnight rate hike from the bank of New Zealand shows the bulls have residual confidence. With the gold contract regaining the $2,000 level for the first time in nearly 13 months, it is likely even more gains will be forged from disappointing US data in the days ahead. It should be noted that the coming 72 hours brings a veritable avalanche of global scheduled economic data, and clearly the trend of fundamental data for the US this week signals slowing instead of growth. While it appears as if gold is focused on economic uncertainty and lower prospects of further US rate hikes, it is possible that some of the gains in gold and silver prices yesterday were the result of the downside breakout extension in the dollar index. Regardless of the fundamental focus of the gold and silver trade, the outlook from the charts has all the hallmarks of the early stages of a big rally.
PALLADIUM / PLATINUM
With significant divergence between palladium and platinum yesterday, platinum remains the speculative choice within the PGM complex. However, we suspect both platinum and palladium markets were held back yesterday following the softest US light vehicle sales readings since May 2021. Fortunately for the bull camp in platinum, the market has seemingly made the transition from physical commodity to flight to quality instrument. Fortunately for palladium bulls, the market yesterday avoided aggressive selling from sagging physical demand fears. Unfortunately for the bull camp in palladium, ETF holdings yesterday declined by 3,813 ounces reducing the year-to-date gain to 5.7%. We think the palladium market avoided aggressive selling because the spec trade holds a near record short and current prices are almost at the middle of the last 35 days trading range.
COPPER
Despite news that Chile’s state-owned copper company saw its output in February drop by 15% relative to year ago levels, copper prices this morning forged a fresh lower low and appear on track to extend declines into the end of the week. While the copper market yesterday initially managed to hold up against deteriorating economic sentiment, sellers became aggressive after very disappointing news from US factory orders and the job openings report. With a veritable avalanche of global economic data scheduled for release through Friday, copper prices are likely to remain in a downdraft. The problem for the bull camp is a lack of fresh news on the status of the Chinese economy and little in the way of production threats flowing from South America. In the end, fear of slowing and/or disinflation should promote additional speculative selling today.
Interested in more futures markets? Explore our Market Dashboards here.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
