GOLD / SILVER
While the gold market has started out under pressure this morning the dollar index has forged a fresh downside breakout and should provide some support to metals prices. However, gold has diverged negatively with the rest of the precious metals markets early on and it appears as if gold came under noted pressure following the release of positive Chinese PMI data last night. Therefore it would appear as if the gold market has not made the transition where prices benefit from favorable economic news. With silver divergence positively with gold in the early going today, forging a 9-day upside break out on the charts and seemingly correlating positive with “physical commodities” the bull camp clearly starts the week with the edge. In other words, silver appears to be tracking physical commodity market conditions and given the positive Fed policy move last week and a fresh new low for the dollar, silver is likely to test and take out the mid-August high up at $28.77.
PLATINUM / PALLADIUM
While the palladium market has not broken out to the upside this morning, it sits right on 9-day highs and appears to be drafting lift from strength in physical commodities and from favorable Chinese economic data. However, the palladium market since the February reversal has not shown much in the way of lift from the steadily improving Chinese economy, and therefore we suspect gains will be hard-fought and difficult to sustain. While the platinum market is trading higher this morning, it is not showing as much positive correlation with other commodities as palladium and silver despite the fact that UBS predicts platinum will narrow its significant discount to gold ahead and trade above $1000 by the middle of next year.
As would be expected favorable Chinese PMI data overnight has sparked an upside breakout in copper even though the official manufacturing PMI reading down ticked from the prior month. However, the trade apparently sees the non-manufacturing PMI improvement as a sign that the economic recovery is broadening. Adding into the upward tilt are reports from a Chinese copper processing company suggesting copper ore will remain tight ahead but copper futures should also benefit from continuing strong iron ore imports.
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