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Markets Short-Term Overbought


While the gold and silver markets remain within proximity to yesterday’s pulse up highs, we view the charts as vulnerable in both markets. Furthermore, we also see the fundamentals in favor of the bear camp in the wake of yesterday’s surprisingly soft US CPI readings.


We think the palladium market might have forged a bottom with yesterday’s spike low, as adjusted for the massive decline of $420 since the last positioning report, the palladium market likely holds a record net spec and fund short positioning. Overnight the platinum market continued to damage its charts with another lower low for the move and that leaves little in the way of support on the charts until $920.40.


The recovery bounce in the copper market this morning is surprising considering that Chinese industrial production readings for July released overnight were indicative of slowing, with the additional negative coming from a softer than expected retail sales result. However, a significant overnight decline in LME copper warehouse stocks provides some cushion against news that Chinese aluminum and steel production plummeted in July, possibly because of Chinese efforts to reduce capacity and discourage inflation.

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