Written Commentary
GOLD & SILVER
Since yesterday there has been a migration to US Treasuries and the dollar on concerns over a global recession, which was triggered by a slew of disappointing economic data out of China and a surprise rate cut by the Chinese central bank. US data was disappointing as well, with declines in homebuilder confidence and New York state manufacturing. In contrast, BofA’s monthly survey of global fund managers reported that investor sentiment was still bearish but not “apocalyptically” so. FOMC minutes Wednesday will give a clue on Fed sentiment for the expected rate hike in September.
PALLADIUM & PLATINUM
PGM prices were weaker overnight, with September palladium trading to Monday’s low and October platinum extending to the downside. These markets are feeling the same pressure that gold and silver are, with concerns about a global recession, a stronger dollar, and renewed expectations that the Fed will raise rates aggressively next month making it less attractive to hold any precious metal. Yesterday’s disappointing Chinese economic data raised concerns about auto demand, computer chip production, and the demand for auto catalysts like palladium and platinum.
COPPER
While copper saw significant downside follow-through from Friday’s negative reversal yesterday, the market managed to climb well above its midsession lows late in the session and was grinding out a mild gain overnight. In addition to a sluggish Chinese industrial production reading, several other economic data from China on Monday signaled a pullback in the property sector. This hurts copper demand prospects for China and could have a negative impact on global demand as well.
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