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Metals Mostly Lower


While the bias in gold and silver prices looks to remain up over the longer term, the markets are facing signs of corrective pressure throughout the physical commodity space early today. The bull camp should be supported by a 7th straight day of gold purchases by ETF’s with net purchases year to date at 20.7 million ounces. Unfortunately for the bull camp the August gold contract yesterday retested the $1800 level again and was unable to pierce that resistance zone in a fashion that suggests a loss of momentum and the need for some slight back and fill on the charts. With gold, silver and other physical commodities seeing lift from a weakening Dollar recently it is not surprising to see commodities fall back this morning in the face of a Dollar bounce.


While the September palladium market forged a hook reversal on its charts yesterday, it is extremely difficult to call for a reversal of the down trend given the performance in palladium over the last 50 trading days. Obviously demand expectations for a number of physical commodities like palladium are improving and perhaps that is beginning to prompt some traders to see the palladium basing action of the last 3 months as an indication that some value has finally been found above $1,750. However, to signal an upside breakout on the charts probably requires a trade above $1,977 and perhaps a close above $2,000. The platinum market did reject a 4 day low yesterday, but prices ultimately remained within last week’s range in a fashion that suggests the sideways to lower bias is likely to remain in place.


With a massive trading range in copper yesterday and a fresh high for the move (the highest since January 23rd), the bull camp clearly extended its control into the new trading week. In fact with a fresh higher high for the move again early today and a retest of $2.80 the bull camp has stood up against a negative physical commodity market environment today. Obviously better-than-expected US ISM readings, another Chinese scrap copper import quota, a year over year decline in Russia January through May copper exports, a large daily decline in LME copper warehouse stocks yesterday and further improvement in economic views toward China gives the bull camp ongoing confidence.

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