Written Commentary
GOLD / SILVER
While it is difficult to determine the source of this morning’s initial rally, we suspect part of the lift is the result of Russian comments about the potential for nuclear war. However, the Russian foreign minister suggested dialogue with the US on Ukraine would be useful but also suggested Russia will continue with its objectives. Another supportive development this morning came from the Peoples Bank of China promising to support their economy. With gold at times over the last two months unable to sustain rallies in the wake of historically hot inflation readings, a transition to deflation/slowing should embolden sellers ahead.
PALLADIUM / PLATINUM
While palladium prices have bounced and have traded above yesterday’s close for most of the overnight action, the charts remain bearish. However, an underpin for prices came from news overnight that Swiss palladium exports in March jumped 633% versus February. Switzerland has long been the trade clearinghouse for physical precious metals like palladium, with substantial refining taking place inside the country. With the massive damage in June Palladium yesterday some follow-through to the next lower support level of $2,025.50 is likely. Similarly, the platinum market also looks to have downside momentum.
COPPER
While we suspect copper is benefiting from promises of support or the Chinese economy from the Peoples Bank of China overnight the market is also likely benefiting from a measure of classic technical balancing buying following the massive washout yesterday. However, parsing the promises of economic support from the PBOC there does not appear to be substantial immediate support in the Central Bank’s offerings. Certainly, the threat against Chinese copper consumption is clear and ongoing and there are reports of disrupted import activities due to Covid protocols. The markets are aware of infections in Beijing and draconian lockdown measures if implemented would dramatically increase headwinds for the Chinese economy and copper prices.
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