Written Commentary
GOLD & SILVER
Seeing gold and silver prices start out weaker today is not surprising given the “feared” Federal Reserve chairman speech later this morning at the Jackson Hole symposium. In fact, most markets have already factored in some form of aggressive hawkish statements from the Chairman with action earlier this week! On the other hand, US scheduled data this morning could preempt the reaction to the Fed speech, with the Fed’s favored inflation gauge PCE, scheduled for release early today. Furthermore, the markets will be presented with personal income and spending readings both of which are expected to show strength. Therefore, action in gold and silver will continue to take significant direction from big picture/macroeconomic developments with little regard for classic internal physical supply and demand issues.
PALLADIUM & PLATINUM
In retrospect, news that the Chinese government is implementing policies to facilitate the acquisition of key industrial material inputs probably served to lift palladium prices this week, but that supportive development has been countervailed overnight by a reduction in palladium price forecasts for December from UBS. About the most positive issues for platinum prices today is the market’s ability to consolidate and post minimal higher lows this week. While insignificant platinum ETF holdings yesterday increased by 2,362 ounces, but those holdings remain 12% lower year-to-date.
COPPER
Clearly, the latest round of announced Chinese stimulus has boosted Chinese copper demand hopes and in turn has prompted the highest trade in September copper since June 30th. The rally this morning might be garnering additional buying interest from reports of liquidity problems at one of the largest Chinese copper trading companies. However, a noted 3,693-ton inflow to Shanghai copper warehouse stocks tempers an extremely tight Chinese domestic supply condition. However, expectations for massive expansion of the Chinese electricity grid were given more clarity with the latest Chinese stimulus plan, which in turn sparked predictions of a massive expansion of Chinese copper demand over the coming years.
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