GOLD / SILVER
The US dollar was higher again overnight, as the December Dollar Index reached a new contract high, and the nearby chart reached its highest level since May 2002. December gold fell below Wednesday’s post-meeting low and could be on course for another leg down. Gold is technically oversold, and traders have been weighing this against prospects for rate hikes to extend into 2023. US Treasury markets collapsed yesterday and extended those losses overnight. This means higher long-term rates, which pulls investment away from non-interest-bearing assets like gold. US initial and ongoing jobless claims came in lower than expected on Thursday, and the KC Fed manufacturing index showed a surprisingly large recovery, back into positive territory. This gives the Fed even more leeway for raising rates. Investment interest continues to drain from gold. With the dollar making new highs and the Fed determined to push rates higher, it is hard to build a bullish case for gold. Even a short covering rally seems elusive. Increased tension over Russia could be a spark some safe haven buying, but that has not happened yet.
PALLADIUM / PLATINUM
October platinum is correcting a two week rally off contract lows from the first half of September. A couple of investment banks have cut their forecasts for China’s economic growth in 2023, which does not bode well for autocatalyst consumption. Earlier in the week, Goldman Sachs put China’s GDP growth at +4.5% in 2023, down from a previous forecast of +5.3%. Overnight, Japanese investment bank Nomura cut its forecast for China’s 2023 growth to 4.3% from 5.1% previously. Among their concerns was an expected weakening in passenger car sales as the effect of this year’s tax cut wears off. Investment interest is draining from platinum. ETFs cut platinum holdings by 5,060 ounces on Thursday, their eighth straight decline.
December copper broke below its consolidation overnight and is on track for a second negative week in a row. Chinese equity markets overnight saw some knock-on selling after US equity losses yesterday, and that put pressure on copper prices. A fifth straight increase in daily LME copper stocks marks the longest build streak since April. Weekly Shanghai exchange copper stocks also saw a modest build. This trend of stock builds could be an indication of slack demand. Earlier this week, the city of Shanghai announced eight infrastructure projects that will cost $257 billion earlier this week and could ultimately increase copper demand, but near-term demand indicators have weakened.
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