PLATINUM / PALLADIUM
The 3rd day of higher high action in platinum has surprisingly found classic fundamental support from a modest daily inflow to platinum ETF holdings and more importantly from news that a major platinum group metals refining hub saw its August platinum exports increase by 18% from July. Total platinum shipments from Switzerland were 1666 kg from 1408 kg in the prior month. Therefore, the recent recovery has been given fundamental support and could be extended by spillover lift from gold and silver buying. We are still concerned that a massive UAW strike against the big 3 automakers could crimp demand, but given the long-term purchasing activity by automakers, the strike would need to last a long time before forward buying by the automakers is materially impacted. Unfortunately for the bull camp, the aggressive rally over the prior 3 trading sessions leaves the market with little close in support.
GOLD / SILVER
With the dollar showing signs of eroding the charts in both gold and silver continue to show signs of a slight revival. Unfortunately for the bull camp investment interest in gold continues to wane with ETF holdings reduced for the 12th straight session, while silver investors bucked the trend with a purchase of 1.2 million ounces. Apparently, the gold and silver trade are looking beyond the probable Bank of England rate hike tomorrow to the highly likely US Federal Reserve rate hike pause on Thursday. However, as indicated yesterday we are suspicious of market sentiment so conclusively on board with the Fed’s decision to pause especially after the barrage of foreign central bank rate hikes. On the other hand, the US Federal Reserve appears to have confidence they can manage inflation and keep the economy moving forward. In a very positive demand development overnight Swiss gold exports reportedly increased by 7.3% in August with sales to India and China increasing which is a very supportive development. In fact, India purchases from Switzerland tripled the prior month with a net purchase of 26 tons. Total gold shipments from the key global gold refining hub topped 123.5 tons in August from just 115.1 tons in July. In article from Reuters this morning indicated that gold ETF inflows hit a 16-month high in August which must refer to India ETFs exclusively, as Western gold ETFs held 68 million ounces as of August 1st and finished at 62 million ounces. While the fresh signs of improved demand from the Swiss transfer of gold last month could be a one off, it is the first solid classic bullish fundamental development for gold in some time. In another minimally supportive development, the IMF yesterday indicated that Russia, Uzbekistan, and Poland raised their August central bank gold holdings by 3.1, 8.7 and 14.9 tonnes respectively. In retrospect, the technical action in gold yesterday was very impressive as gold stood up to rising US treasury yields, weakness in other physical commodity markets and in the face of slack action in silver prices. In fact, treasury yields yesterday nearly posted a new high year but fortunately for the bull camp, the dollar was off balance and could stay that way into Thursday’s FOMC meeting.
The corrective action from last week’s high has extended again today with a continuation of inflows to LME copper warehouse stocks of 2025 tons and because of downbeat views toward the Chinese copper sector in total. In an unrelenting pattern of inflows to LME copper warehouse stocks, supplies at the exchange have reached 149,775 tonnes for an increase of 170% since June. It should be noted that Chinese August refined copper output was up 16.4% versus year ago levels and that could be a positive sign for the Chinese economy. While more of a psychological negative than an actual negative, seeing the United Auto Workers strike expand and ND OR show signs of extending significantly would add to the bearish tone in the copper trade.
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