GOLD / SILVER
December gold was higher overnight, and it seems capable of taking out Tuesday’s three month high today. The market got another boost on Tuesday from the October PPI report that came in was well below expectations. This came after last week’s soft CPI number. December gold traded to its highest level since August 17 after the report was released but closed near unchanged on the day. This kind of anemic reaction has the bulls concerned that the market is getting a bit toppy. PPI came in at +8% year over year versus expectations for +8.4%. It was the smallest increase since July 2021. Core PPI was +6.7% year over year versus +7.2% expected and +7.1% in October. Having two milder than expected inflation numbers in a row has boosted talk that the Fed could be ready to pull back on its monetary tightening, but comments from Fed members have been mixed. Atlanta Fed President Bostic said on Tuesday that he sees little evidence that the aggressive monetary policy is slowing inflation and that more hikes would be needed to get inflation down to the 2% target. He said that goods price increases have slowed, but we need to see the service price increases slow as well. A report that a missile hit eastern Poland near the Ukrainian border sparked geopolitical jitters and seemed to attract buyers into the metals late in the session yesterday. Central bank purchases of gold could hit an all-time high of 750 tonnes in 2022 after a surge to nearly 400 tonnes in the third quarter.
PALLADIUM / PLATINUM
The PGMs should benefit if China is indeed finally emerging from its Covid lockdowns. Stronger economic activity there should boost auto purchases and thereby support autocatalyst consumption. However, January platinum closed lower for the third straight session on Tuesday, as it continued to correct its strong rally off the September lows. The market traded higher in the wake of the PPI number, but unlike palladium and the precious metals, it did not make a new high. December palladium did make a new high for the move, and it closed higher on the day. January platinum is overbought and due for a correction, and its first target is way down at $969.90. The next upside target for December palladium comes in at $2,131.20, with support at $2,060.50.
Copper prices remain well supported despite bearish demand news, as tight near-term supplies continue to underpin the market. December copper continued to see coiling price action on Tuesday, as it followed through on Monday’s negative reversal with a moderate loss. The market did manage to rebound from early pressure this morning. Disappointing results for Chinese industrial production, Japanese industrial production, and Chinese house price index readings have diminished the near-term demand outlook. LME copper stocks saw a modest decline today after beingup for two straight days. Prior to that they were down for 15 straight days. The Shanghai Composite reached a 2-month high Tuesday, which is supportive to copper. Today’s US industrial production may provide support if it comes in above trade forecasts.
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