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Metals Outlook Higher


Despite some initial weakness the charts structure of gold remains bullish with prices sitting just under the prior session’s high and within $21 of contract and 8 year highs. However, concerted gains in global equity markets and growing optimism toward the Chinese recovery have dented some of the safe haven allure of gold to start the trading week. In fact gold prices in India had declined for the 4th straight trading session following a series of new record high gold prices and that has prompted some Indian metals analysts to warn that record high prices of gold are likely to prompt selling. Even China is showing signs of muted interest in gold lately with two straight months of net mainland China gold “exports” to Hong Kong.


Despite strength in gold and silver last week and generally positive economic views toward China, the palladium market saw prices erode last week in a sign that the bias in prices remains down. With trading volume declining on the rally off the late June low, it would not appear as if the bull camp has the capacity to shift the trend. In the platinum market, the bias also remains down from the charts with the market also unable to benefit from what appears to be a gradually improving demand environment.


With China reportedly seeing reductions in some treatment and refinery charges for copper concentrate in the coming quarter, bullish futures spread pricing, reports of more lost production in Chile and a very large 8,525 single day decline in LME copper warehouse stocks that puts the bull camp in charge to start the trading week. In fact part of the global rally in equities was attributed to growing optimism toward the Chinese economy and that adds directly to copper demand hopes.

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