Written Commentary
GOLD & SILVER
With a 3-day high in the dollar and signs of noted weakness in Italian consumer prices, outside market influences are negative for gold and silver to start the new trading week. Therefore, we see gold and silver in corrective postures to start the new trading week. In fact, several bullish fundamentals have reversed course and we expect a mini downtrend to unfold. Obviously, a dampening of inflationary expectations removed a primary pillar of the bull case, but seeing a reversal of a downside breakout in the dollar combined with talk that the Fed will “go ahead” with a rate hike in May provides a lot of bearish ammunition. While silver showed signs of diverging with gold, Friday’s sweeping reversal on significant volume combined with deterioration in classic fundamentals projects silver prices to fall sharply directly ahead.
PALLADIUM & PLATINUM
While the reversal in platinum was not as destructive as in gold and silver in last Friday’s trade, last Thursday’s massive range up move on strong volume might foster significant stop loss selling to start the new trading week. Fortunately for the bull camp, the most recent net spec and fund long position in platinum was modest even though it was likely understated given the post report rally of $66.00. With the most recent COT positioning in palladium registering a record net spec and fund short, the palladium market might hold up in the face of a likely liquidation wave in gold, silver, and platinum this week.
COPPER
The bias in copper is down with prices tracking lower this morning despite news of a liquidity injection from the Chinese central bank. In fact, China also saw March home prices post the biggest gain in 21 months, shifting a major negative macroeconomic indicator into a supportive force for copper. However, with today’s price action seemingly poised to push prices down to a test of the 50-day moving average at $4.0480 the bear camp has clearly ignored favorable Chinese news. With a deterioration in global macroeconomic sentiment (from signs of softening in the US and ongoing rate hike fears) combined with a reversal in copper prices at the end of last week leaves the market vulnerable to some back and fill action.
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