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Inflation Stokes Interest in Metals


The net takeaway from the Thursday US trade is evidence that bargain-hunting buyers remain in place in the gold market, but also that inflation is beginning to stoke interest in precious metal markets. In fact, both gold and silver ETF holdings increased yesterday with gold adding 95,369 ounces and silver adding 553,738 ounces. Obviously, the gold market was undermined as-a-result of fear that a hot US CPI reading combined with a 15-month low in US initial claims would result in fears of earlier than expected rising US rates.


We leave the edge with the bear camp in the PGM complex especially with yesterday’s report that South African April PGM output jumped by 276% versus year ago levels. Clearly, the large jump is partially explained away by the reduction in production last year due to coronavirus shutdowns of mining operations. The outlook for the platinum market appears  to be definitively more bearish than in palladium, with the downside extension on the charts yesterday pushing prices to the lowest level since March 8th.


We would have expected the copper market to have remained in a downward washout move today, as a strike threat in Chile has ended, positive news on the Chinese economic condition has been limited, there is a continuing fear of a serious virus breakout at a key port in China, and there are fears that the Chinese government will attempt to force industrial material prices down and that view has been given added credence by their actions over the last 48 hours.

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