Written Commentary
GOLD & SILVER
It is a very telling development for gold and silver to be off sharply this morning in the wake of a significant surge in global inflation fears following a series of very hot UK price readings for May. However, UK inflation is the “hottest” in the G7, with producer price inflation, consumer price inflation, house price inflation and retail sale price inflation all jumping sharply last month. When one combines the extremely hot UK May inflation results with comments from the Fed yesterday that US inflation in May showed a “pronounced pickup”, it is logical for the markets in total to fear even more aggressive global central bank action ahead.
PALLADIUM & PLATINUM
While a large German bank expects nearby palladium futures prices to reach $2,100 an ounce later this year, the strongest bull argument in palladium is the prospect of significant short covering buying following a record net spec and fund short in the weekly positioning reports! However, investors remain cool toward palladium, with palladium ETF holdings currently sitting 10% below the level seen at the beginning of the year.
COPPER
Even though the copper market yesterday managed to reject a large portion of the early washout yesterday, prices have resumed their downward plunge this morning and, in the process, have reached the lowest level since March 2021. Apparently, the strike in Chile is of little concern with the market instead very concerned about a serious contraction in global physical demand. We suspect hawkish dialogue from the US Federal Reserve chairman will add to copper demand fears today especially with significant risk off vibes flowing from equities today.
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