Written Commentary
GOLD / SILVER
We see gold and silver vulnerable to bearish charts in the last trading session of the week. In fact, with a 5-day high in the dollar index in the early going today, and an outflow from gold ETF holdings yesterday of 17,525 ounces the bear camp should feel confident of a retest of the recent consolidation lows down at $1980.90. Certainly, both gold and silver markets managed to reject spike down failures yesterday and recover back to key pivot point areas, but the overall bearish chart tilt remains in place today. Going forward the prospects of rate hike selling in gold and silver will increase until the outcome of the May 3rd US FOMC decision is known. This morning the market has been presented with a much hotter than expected Japanese Tokyo consumer price index reading, a moderation in Australian producer prices, a steady interest rate decision by the Bank of Japan, larger than expected German import price declines, much hotter than expected French consumer prices, much hotter than expected French producer prices, and slightly softer than expected Spanish consumer price index readings for April. Therefore, inflation generally remains a problem in many international areas which likely provides a very minimal push on the US Fed to hike rates again.
PALLADIUM / PLATINUM
We see the platinum market vulnerable to further corrective action today, as the overall global economic environment has softened slightly and a somewhat optimistic view toward China has been pulled down. It also appears as if the platinum charts have suffered fresh damage this morning and sit just above a pivot/failure price of $1075 in the early action. Like gold and silver, platinum is probably seeing pressure from evidence of residually hot inflation throughout Europe and slightly hot US inflation orientated data later this morning could cause further declines in physical commodity prices today. Since the palladium market has begrudgingly traded higher in the wake of the massive rallies in platinum over the last 2 months, its lingering vulnerability to sharp corrective action should be more modest than in platinum.
COPPER
While the copper market has managed a bounce from yesterday’s low of $0.10, overall global macroeconomic psychology remains negative especially following several reports overnight confirming inflation remains a problem in Japan and Europe. However, with Reuters indicating copper is likely to post the biggest monthly losses since last June on sagging demand views, a large portion of bearish sentiment has probably been factored into prices. Fortunately for the bull camp, weekly Shanghai copper warehouse stocks declined by 8,921 tons which is the 9th straight weekly drop which in turn should be seen as a sign of copper supply tightness in China. On the other hand, LME copper warehouse stocks have been marching “slowly” higher recently and have tempered a portion of global tightness fears. However, the outlook for the Chinese economy has shifted several times this week leaving the markets unsure of the recovery claims from the Chinese government.
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