GOLD & SILVER
While gold and silver prices continue to climb without broad fundamental support, fresh lower lows in the dollar again overnight have provided gold and silver with consistent buying interest especially since the dollar reversal on July 14th. With pattern breaking inflows to gold and silver ETFs yesterday it is possible that the three-week rally in gold futures has inspired some investment interest. Yesterday gold ETF holdings saw an inflow of 89,042 ounces raising the year-to-date gain to 3.7%. Silver ETF holdings yesterday saw an inflow of 281,822 ounces but holdings remain 11% lower year-to-date. While gold and silver prices delinked with inflation psychology into the March highs, widespread acceptance of a track toward global recession could introduce a measure of long profit-taking.
PALLADIUM & PLATINUM
The gains in palladium and platinum yesterday were suspect following an avalanche of soft global PMI data and even more suspect in the face of news that the largest Russian producer saw its 2nd quarter production up 0.4% over the same period in 2021. Russian Nornickel output in the 2nd quarter was 709,000 ounces with the company reaffirming its targeted output of 2.4/2.7 million ounces of palladium this year. The Russian mining giant also posted a platinum output decline of 3% in the 2nd quarter but managed to post a rise of 1% on a half-year basis. Nornickel platinum production targeting for this year is 604,000/667,000 ounces.
We suspect fresh headlines regarding a possible Chinese property crisis spilling over into the steel industry prompted the aggressive washout overnight. While the market could have been lower off the potential for an incident involving the US Speaker of the house in Taiwan, we discount that situation as a key market catalyst. However, if it were not for recent evidence of contracting supply from South America, fear of softening Chinese copper demand could have knocked September copper down to $3.40 overnight. Yesterday the world’s largest copper supplier (Codelco) predicted output from Chile this year will declined by 3.4% due to several factors. In addition to sustainable problems with a decline in ore quality, producers in Chile are also encountering water restrictions and labor protests.
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