GOLD / SILVER
While gold prices waffled around both sides of unchanged overnight, the charts remain bearish and are accentuated by ongoing bearish macro psychology. However, while gold and silver prices came under significant attack yesterday morning, the markets posted a very impressive rebound, which in turn should discourage some sellers today. However, the threat of rising interest rates in the US and UK continues to create headwinds for all the markets especially as that theme has lifted the dollar this week and resulted in treasury bonds reaching the lowest level since March 15th yesterday. Going forward, we see the bears holding a technical edge with the most recent COT positioning report in gold showing a net spec and fund long at the highest levels since April last year. While the charts in silver marginally favor the bull camp today and the market saw very supportive long-term fundamental information yesterday, a 2nd straight day of large outflows from silver ETF holdings has resulted in holdings shifting into a minimal net decline year-to-date.
PALLADIUM / PLATINUM
With the platinum market forging a higher high yesterday and reaching the highest level since January 11th in the face of noted weakness in gold, a global risk off environment and a washout in palladium, the bull camp in platinum should be emboldened. While physical demand expectations from China are improving, sentiment in platinum on that issue was likely overpriced into the high yesterday especially with a metals conference in Chile suggested Chinese copper demand has yet to rebound! With palladium lower in the face of a significant upside breakout in platinum yesterday it is possible that a portion of the bull camp in palladium shifted into platinum.
In addition to recently reported softness in Chinese copper imports, a resurgence of slowing fear from increased potential for further interest rate hikes, the bear camp in copper is also emboldened this morning by talk at a South American conference that a rebound in Chinese copper demand has not taken place yet. However, the copper market in the last positioning report was net spec and fund “short” and the outlook for the Chinese economy continues to improve. Fortunately for the bull camp the Peoples Bank of China left interest rates unchanged this morning and Goldman Sachs has released a very bullish view toward copper based on “powerful demand” from the movement toward green technology. In the end, big picture macroeconomic sentiment remains bearish toward physical commodities today with US jobs related data likely to set the tone for the rest of the week.
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