GOLD / SILVER
The precious metals markets are staying clear of their recent lows, but they are having trouble regaining upside momentum, even with the late rebound in global risk sentiment yesterday. They may have to wait until the FOMC meeting is out of the way before they can make a recovery move. Both gold and silver were able to rebound from heavy early losses yesterday, but they could not hold onto those gains and finished in negative territory. The prospects for a 75-basis-point rate hike at Wednesday’s FOMC meeting continue to weigh on the markets, but the chances for a 100-basis point hike appear to be receding. At this point, the chances remain for three more rate hikes this year, and that has made it difficult for gold and silver to sustain upside momentum.
PALLADIUM / PLATINUM
It’s possible the PGMs could benefit from the rebound in global risk sentiment on ideas it would encourage light vehicle sales and paint a rosier picture for autocatalyst usage. The dollar’s inability to take continue to make new highs may spark a pullback in reaction to the FOMC meeting, which could help platinum and palladium maintain their recent upside momentum. The COT report showed both markets with generally balanced spec positions, and they could benefit from stronger global risk sentiment.
Copper prices continue to see coiling price action, as they have given up early gains and have fallen back into negative territory this morning. The market was unable to fully benefit from Monday’s improvement in global risk sentiment, as it finished the day under minor pressure. A weaker than expected reading for Chinese foreign direct investment further eroded demand prospects and was an early source of pressure. There has been a second sizable build in LME copper stocks in as many days weighed on prices, but stock levels remain close to their five-month lows.
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