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Divergence Cont Between Metals



While the gold market is close to posting a higher weekly trade, the bull camp was unable to fully benefit from a slight tempering of Fed hawkishness this week. However, despite a significant initial washout, the dollar does not appear to have shifted down because of the tempering of expectations of the magnitude of future US rate hikes. In other words, the Fed has become less “bearish” for gold, silver, and other physical commodities. Gold and silver will likely draft some support from inflows to both gold and silver ETF instruments on Wednesday with silver adding 132,985 ounces and gold adding 23,232 ounces.


Divergence continues between gold & silver, palladium & platinum. The charts in the palladium market remain negative with the markets bounce from this week’s spike low hard-fought and unlikely to be sustained. Certainly, there are supply threats from Russian and African production areas but the dominating force in the PGM markets remains demand and more specifically the potential demand from China. Platinum charts are positively structured with uptrend channel support consistently respected and prices attempting to settle in and build consolidation around the $1000 level.

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The bear camp must be discouraged with copper prices grinding higher in the face of expanding Chinese Covid activity restrictions. Therefore, we caution against being long copper given record daily Chinese infection readings and growing civil unrest around the Fox Conn Apple factory. However, with a 15,568-ton decline in weekly Shanghai copper warehouse stocks and tightening in other copper supply readings, the $3.60 level has become a fundamental value zone. While rising car loan rates are restricting some car sales, dealers are still reporting brisk business with buyers rushing to beat even higher loan rates ahead.

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