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Gold Firms Overnight


Gold firmed overnight and the dollar weakened, as the market seems to be forging through some occasionally hawkish Fed commentary without too much damage. It helps that Fed Vice Chair Lael Brainard commented that she thinks it will be appropriate soon to move to a slower pace of rate increases. This contrasted with a statement by the Fed’s Waller earlier in the session that seemed to downplay the significance of last week’s CPI report. The PPI report today will provide another look into inflation prospects, with the trade looking for a slightly lower headline number than September. The flare-up in risk anxiety in the cryptocurrency sector following the FTX bankruptcy has diverted investment flows towards precious metals as well. The PPI report today offers the next volatility event. A softer than expected number would add confirmation to last week’s soft CPI number and could inspire more gains in gold and silver. The Commitments of Traders report showed managed money traders were net buyers of 30,659 contracts of gold for the week ending November 8, reducing their net short to 8,219. In silver, managed money traders were net buyers of 15,961, which moved them from a net short position to a net long of 12,493. The buying trend in both markets is positive, and neither is overbought.

Gold bars


Platinum was moderately higher overnight, but palladium was up sharply, January platinum was the only metal in the precious group to close lower on Monday. The market failed to benefit from slightly less hawkish dialogue from the Fed Vice Chair or from reports that China will take try to support their property sector. In one regard, hearing that Walmart and other retailers are balking at paying higher prices to suppliers could mean that buyers of industrial metals are balking as well. Platinum’s rally did seem to get overdone last week, and its move to a higher high on Friday was met with a lower close. Furthermore, it opened on its high on Monday and sold off, which is technically bearish action for two straight sessions. After the sharp gains of the past few weeks, the market could be vulnerable to a correction, especially if it falls below $1,013.60 or the PPI data disappoints. December palladium closed higher on Monday and pushed even higher overnight. The market traded above the 50% retracement of the October-November decline, leaving $2,063.80 as the next target.


December copper closed lower yesterday after trading to its highest level in 4 1/2 months, and it followed with some mild losses overnight. LME stocks have increased sharply for the second day in a row after declining for 15 straight sessions, and this may have the trade concerned that demand is not as strong as previously thought. A weekend spike in Covid cases in China has diminished that nation’s copper demand outlook. That was followed by a weaker than expected Chinese industrial production reading. However, recent moves by the Chinese government to shore up their property sector and relax some of their Covid restrictions provide some optimism that China’s copper demand will recover. A softer dollar and a rebound in Chinese and US equity markets have could provide some support today. The Commitments of Traders report showed managed money traders were net buyers of 10,921 contracts of copper for the week ending November 8, increasing their net long to 16,180.


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