Written Commentary
GOLD / SILVER
While December gold has avoided a fresh lower low in the early Thursday trade the path of least resistance remains down with outside market forces firmly anchored in the Bears camp. Unfortunately for the bull camp the markets will face another critical US initial claims reading, with last week’s reading posting the lowest weekly claims since early February. At present, analyzing the gold market has become simplistic with unending strength in the dollar dominating the gold market. Even interest rates have consistently maintained their outside market pressure on gold and silver, and we are not sure if a significant surge in Chinese retail demand will be able to offset deteriorating global gold demand expectations.
COPPER
Fortunately for the bull camp a long Chinese holiday directly ahead is probably prompting some profit taking/short covering. However, with the holiday, weekly Shanghai copper warehouse stocks were released early and posted a decline of 15,169 tons and that adds a measure of fundamental support to this week’s consolidation low zone buildup around $3.6240. On the other hand, the most important bullish news of the week for copper came from Chinese factory activity in September which stabilized and has sparked hope that the Chinese recession threat is moderating. Unfortunately for US copper producers, the Chilean peso reached the lowest level since last November and therefore Chilean exporters have a pricing edge.
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