GOLD & SILVER
While the dollar did not post a higher high for the move in the overnight action it remains a headwind for the gold bull camp. Given the lack of a recovery in gold and silver following the downgrade of US credit by the rating agency Fitch the market is not sensitive to flight to quality issues. In a second negative story the World Gold Council indicated that Indian gold demand in the 2nd quarter declined by 7% from last year and suggested the slumping demand was the result of persistent record high Rupee gold prices which reduced affordability and turned off consumer interest. However, global central bank buying in the first half was a record at 387 tons, but that bullish development is countervailed by the significant slowdown in the 2nd quarter sales of only 103 tons.
PLATINUM & PALLADIUM
With a fifth lower low for the move in October platinum and a sizable outflow from platinum ETF holdings to start the trading week, the market remains out of favor and potentially destined for a return to $900. The slide in platinum prices Tuesday is discouraging to the bull camp, as a South African platinum mining company predicted a world deficit this year despite predictions that mined supply will recover as the South African national electric utility Eskom sees less load demand less power reductions. Initial downside in targeting is $924.60 and then again down at $909.80. The palladium market remains range bound with the market lacking fresh and changing fundamentals.
With yet another negative Chinese manufacturing PMI reading, softer than expected US economic data, an inflow to LME copper warehouse stocks, a periodically stronger dollar and a bearish reversal on the charts, the bear camp has significant ammunition to send prices even lower. Some traders suggest that the significant gains posted in July resulted in long profit-taking on the first day of August, but the latest COT positioning report adjusted for the post report rally was hardly severely overbought and therefore should not produce significant long liquidation volume.
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