Written Commentary
GOLD & SILVER
With a 10 day high in the dollar early today and a fresh new low for the move in August gold, the market briefly entered a gap left from early March starting at $1910.50 and ending at $1908.90. Apparently, the gold and silver trade saw the hawkish dialogue from the US Federal Reserve chairman yesterday as more convincing than the hawkish dialogue from other major central bank leaders as money flowed toward the dollar after the conference ended for the day. Nonetheless, the consensus among world central bankers was two or “more” interest rate hikes were likely ahead. In short, gold and silver remain under pressure from the rising rate environment.
PLATINUM & PALLADIUM
With a major range down failure yesterday ultimately resulting in a rejection of $908.50 pricing and open interest near the lowest levels since mid-April, October platinum may have forged an intermediate low. In a positive development, platinum ETF holdings yesterday increased by 8,586 ounces which is a single day increase of 0.3% and that in turn raises the year-to-date gain in holdings to 5.7%. While the platinum market did not find support from the 4th Chinese stimulus move earlier this week, a slight improvement in global macro sentiment combined with a significant short-term oversold technical condition should increase the potential for an interim low. In fact, October platinum prices yesterday forged a significant downside extension on moderate volume and ultimately bounced $14 off the initial low in a sign of a possible exhaustion low. Similarly, the palladium market spiked lower yesterday, rejected even numbered $1200 pricing, and then recovered sharply thereby giving off signs of a selloff exhaustion.
COPPER
Given weakness in Chinese equities, the need for the PBOC to intervene to support the Chinese currency and fresh damage on the charts more downside is expected in copper. As in many other metal markets, copper prices have caved in this week despite a slight improvement in global economic sentiment. In fact, copper prices have faltered despite a second extremely bullish price forecast for copper from a respected industry source. In a near-term and more applicable supportive development, the London copper trade expects LME copper prices to build consolidation support above this week’s lows in a sign that the market could be approaching value.
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