Written Commentary
GOLD & SILVER
In retrospect, last week was extremely disappointing to the bull camp as a series of inflation readings showed hot inflation relative to history, but some analysts saw the data as a slowing of inflation and perhaps even the beginning of a peak of inflation. However, the gold and silver markets have declined persistently since the March high, despite several extremely hot inflation reports in that timeframe. Certainly, the unrelenting rally in the dollar index and rising interest rates is a bearish environment for gold and silver, and therefore the classic flight to quality buying off the inflation theme was overwhelmed. Recently, the gold and silver trade has also come under pressure from developing signs of disinvestment in gold and silver ETFs from shrinking disposable income for retail jewelry sales and mint products.
PALLADIUM & PLATINUM
As opposed to gold and silver, the palladium market appears to have solid consolidation low support (which have preceded key lows of significance since September 2021) above the $900 level. Unfortunately for the bull camp the net outflow from palladium ETF holdings last week was 25,266 ounces bringing the year-to-date contraction to 27%. Like the rest of the precious metal markets, platinum is under pressure from several macro market forces like rising rates, strength in the dollar, fear of slowing economic activity (softer physical demand) and because the close Friday was still $75 above the perceived bottom off the late April/early May consolidation zone.
COPPER
Unfortunately for the bull camp, Shanghai remains in lockdown but a story in the press this morning suggested a return to more normal conditions might not be seen until June 1st after press reports last week suggested some lockdowns would be ended later this week. Therefore, fear of slowing in the Chinese economy remains front and center in the copper market. Adding into the negative view toward copper is disappointing Chinese industrial output combined with satellite data confirming the slowest Chinese port activity levels since the 2020 lockdown
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