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Looking for Bounce in Metals


With the gold market yesterday falling sharply and forging a 5 day low, it appears as if the market has seen hopes for a stimulus deal decline again. While we would expect to see gold and silver prices bounce in the event a stimulus deal is agreed-upon today, without a deal and especially in the event that discussions are halted until after the election, we would not be surprised to see December gold spike down to the October low of $1,877.


The December palladium contract has forged a triple high around $2,429.70 this week, has not benefited from very upbeat high-frequency economic data from China or from what appeared to be very inflationary predictions from a well-known and successful fund manager. While the platinum market also came under aggressive liquidation selling yesterday, it did manage to reject a large portion of that washout as if value was found at $863.50 in the January contract.


We think the copper market has moved to extract some premium in prices from the long awaited hope for a signed stimulus deal and that could cushion copper somewhat in the event no deal is carved out before the close today. However, longs should realize copper is likely carrying a record spec and fund long and therefore distinct fundamental and or Chart based negatives today could result in a massive stop loss selling wave.

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