Written Commentary
GOLD & SILVER
As was seen at times yesterday the gold market is one of a very few physical commodities trading in positive territory over the last 36 hours. Certainly, it is possible that gold is drafting a measure of flight to quality buying from massive money fleeing equities, but we think falling treasury rates and vulnerable dollar charts give the bull camp several arguments. In fact, as of this hour opening projections for the Dow call for a decline of 500 points and gold is for the time being tracking inversely with equities. However, gold ETF holdings continue to decline with a 10th straight day of outflows yesterday reducing this year’s net inflows below 7 million ounces.
PALLADIUM & PLATINUM
In retrospect, we attribute the palladium bounce off last week’s lows as classic short covering buying from a near record net spec and fund short. However, a continued definitive pattern of outflows from palladium ETF holdings, fears of global slowing and the absence of evidence of reduced Russian supply, leaves the market on track to return to last week’s low down at $1837. Platinum is in the same boat as palladium with prices sitting very near deflated price lows from the last 8 months consolidation lows. However, it should be noted that investment demand in platinum ETFs also continues to decline with another outflow yesterday pulling year-to-date holdings 5.8% lower on the year.
COPPER
The copper market is avoiding pressure from broad-based big picture physical commodity market selling at the hands of an unfolding debacle in the US equity markets. However, copper might be drafting support from parallel gains in both Shanghai equity markets overnight which in turn could be seen as a proxy for improvement in the Chinese economy as activity restrictions lesson. Evidence of the broad-based negative sentiment operating yesterday in the copper trade was similar sharp declines in copper related equity shares.
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