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Metals Futures Under Pressure


With a fresh contract high in the dollar and fresh market chatter regarding a US interest rate hike of 1%, gold and silver start the session back under significant pressure. Unfortunately for the bull camp, the markets are likely to see fresh selling following the 2nd round of US inflation readings (PPI) this morning. In fact, given the significant recoveries off yesterday’s lows both gold and silver are technically vulnerable to a quick slide back toward this week’s lows. In a minor supportive overnight development Indian gold jewelry export to the UAE are showing signs of improving with the improvement attributable to a recent trade agreement between the two countries.


The action in palladium prices this week fits classic fundamental action for physical commodities facing recession fears and a ratcheting upward of the magnitude of the US rate hike at the end of the month as that should result in softer physical and investment demand. Supporting PGM prices are indications that a major Russian “mining company” is flirting with bankruptcy because of sanctions and that should create a measure of supply uncertainty for platinum and palladium.


Not surprisingly, a ratcheting upward of global recession fears and talk of a 1% US rate hike later this month has knocked copper back from yesterday’s bounce. In fact, headline coverage on copper pointing out the market’s economic indicator status is likely causing fresh hedge and speculative selling. With a very long list of bearish macro and micro fundamental factors we see fresh contract lows ahead. Even Chinese news has shifted bearish with fresh concern surfacing on the Chinese property sector overnight.

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