Written Commentary
GOLD / SILVER
Yesterday instead of an inflationary rally, gold and silver prices fell sharply and signaled their fear of a shift in policy later today. On the other hand, pressing the short side of gold near consolidation lows of $1,760.20 could prove painful if the net take-away from the Federal Reserve meeting later today is less than a doubling of tapering. In a surprising development, the House voted to raise the US debt ceiling by $2.7 trillion, which historically would have lifted gold and silver prices from an inflationary perspective but instead the markets saw no reaction.
PALLADIUM / PLATINUM
While the PGM markets were not tracking inflationary conditions, the markets were pressured because of fears that the very long period of low rates is likely to come to an end later today. However, with the aggressive range down washout we suggest the net spec and fund short in palladium will register a fresh record short Friday after the close. Like palladium, the platinum market is poised to feel pressure from today’s Fed meeting and from fresh technical damage on the charts. Earlier this week J.P. Morgan forecasted platinum prices to average $1,144 next year while Commerzbank projected platinum to price at $1,100 by the end of 2022.
COPPER
Clearly, the copper market saw overnight Chinese economic data as disappointing, with the trade clearly focusing on the softer than expected November retail sales result. However, the trade expects further fiscal and monetary support for the Chinese economy (of a pattern of soft Chinese data), but in the near-term hope of Chinese government support does not appear to be capable of supporting copper prices.
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