The copper market continued to waffle within a trading range yesterday despite generally bearish news flow from China, ongoing risk off sentiment from the economy and bearish action in US treasuries and the dollar. In fact, the copper market has held near unchanged levels this morning despite fresh news that infections in China have prompted the government to warn citizens remain on guard against the new coronavirus strains which many interpret to mean no lessening of restrictions soon. However, the path of least resistance might be tilting lower if the 2nd critical US inflation report of the week (CPI) posts a minimal uptick as that will leave the inflation fighting/over tightening threats in place. While it is difficult to determine the net impact of reports that Russian copper supply is moving toward the LME exchange in large volumes, the potential for the exchange to reject the supply as undeliverable could create a volatility event in prices.
GOLD / SILVER
While the release of the PPI report yesterday likely tempers the reaction from today’s CPI reading, the combination of the two readings will begin the debate on the magnitude of the rate hike after the widely anticipated November 2nd hike. With the dollar yesterday posting a 5th straight higher high and US inflation hot enough to justify another jumbo interest rate hike, the gold and silver markets are likely to face ongoing outside market adversity. The most recent FOMC meeting minutes release yesterday showed consensus among the Fed to continue to raise interest rates last month with minimal recognition of some cracks in the economic foundation. In the near term, we leave the bias in gold and silver pointing downward with what seems to be four bearish factors for every bullish factor. Key pivot point support in December gold today is $1,666.50 with similar support in December silver pegged down at $18.74.
PALLADIUM / PLATINUM
With the palladium market drifting below the midpoint of the last two months trading range and market moving fundamentals virtually nonexistent in the headlines this week, the path of least resistance remains down. Going forward in the event the US CPI report furthers the continuance of inflationary concerns, we expect December palladium to fall below $2,100. With the January platinum failing at the 100-day moving average, failing at the $900 level, and posting an 8-day low, the charts obviously favor the bear camp. Near term downside targeting is $875.80 and then $865.20 if a broad-based risk off event follows the US inflation report.
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