Written Commentary
GOLD & SILVER
With October gold approaching 30-day highs without support from a weaker dollar suggests the focus of gold has rotated again. Obviously, ongoing tensions between Taiwan and China are likely responsible for some of the minimally positive early track today especially with Taiwan claiming Chinese live fire military exercises are part of an invasion plan. While October gold spent most of the Monday trade within the prior 2 days ranges, the charts this morning favor the bull camp again and project a rally back above $1,800 today. Unfortunately for the bull camp in gold and silver, both gold and silver ETF holdings declined for the 5th straight session with a decline in gold of 12,004 ounces and an outflow of 709,190 ounces in silver.
PALLADIUM & PLATINUM
Gains in the palladium market are surprising considering a Reuters poll last week predicting lower palladium prices ahead. The stellar US jobs report last week provides some palladium demand hope, as does the US spending plan focused on the expansion of electric vehicles. In fact, the press is beginning to embrace the storyline of a global shortage of strategic metals because of purchasing incentives provided by governments seeking to meet clean-air objectives. Like the palladium market, we assume the platinum market is benefiting from new green regulations and expectations that some rare earth metals could run out of supply as the world ramps up use of higher tech vehicles utilizing batteries.
COPPER
With a higher high and the highest price since July 5th, classic short covering might be shifting into classic speculative buying. The strength in copper prices this morning is surprising considering news of a Covid lockdown of Hainan Island which has stranded 80,000 tourists. The market is also being presented with a Covid breakout in Tibet which hints at the prospect of further lockdowns and increased economic headwinds for China. Another cushion for copper is an ongoing concern of supply tightness in China, with one inventory measure indicating physical supply is now 42% below year ago levels. A fresh limiting force for copper prices are reports of a sharp jump in throughput of copper scrap in eastern China.
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