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Explosion in Gold Overnight


A veritable explosion in gold and silver prices overnight is likely the result of a dovish Federal Reserve outcome, but also because of a significant downside washout in the dollar index. It is also likely that a series of international inflationary data contributed to the upward pulse which in turn likely prompted some technical/stop loss buying. Yet another bullish development for gold overnight came from the World Gold Council which indicated gold buying in the most recent quarter jumped by a whopping 60% on year ago levels, but that news was offset by average four-year investment demand readings.


Obviously, the PGM markets have benefited from the sharp upside awakening of gold and silver. However, we suspect near term gains will set a trap for the bull camp after the benefits of the US Federal Reserve dialogue and the forward progress in the US infrastructure package wears off.


Yesterday in a change of pace, the copper market focused on something other than China-centric developments. While the copper market was unable to sustain early strength, the rally Wednesday morning and again this morning was likely the result of reports that a copper mining union at a BHP mine in Chile rejected a contract offer and might be poised to strike at one of the world’s largest mines.


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