PALLADIUM / PLATINUM
While the initial range in platinum today is narrow, the trade is likely to see flares of volatility over the coming 36 hours with the banking crisis, Fed decision and a series of global inflation measures likely to ripple through precious metal markets. January Swiss exports were 847 kg and jumped to 3868 kg last month. While the Swiss customs report did not provide a breakdown of where the jump in platinum exports occurred, given the massive Swiss gold export increase to China last month, we suspect China contributed significantly to the February platinum outflows from the key refining hub of Switzerland. Unfortunately for the bull camp the charts are bearish this morning with uptrend channel support relatively far below the market at $955.65 and without a broad rise in physical commodity prices today we favor the downward track. Obviously, we are not as bearish toward platinum as we are palladium as the palladium market has clearly lost bullish sensitivity and is embracing the downward track on the charts. The palladium market looks to remain a classic physical commodity facing periodic demand fears from industrial substitution and from renewed recession fears.
GOLD / SILVER
Without a fresh bank problem added to the recent list, a measure of relief in the markets should prompt long profit-taking in gold and silver. Unfortunately for the bull camp, the focus of the trade and the source of triple digit gains off the early March low in gold were primarily flight to quality and this morning the markets are “somewhat relieved” that time is passing without fresh Bank issues. However, even a very minor headline pointing suspicion at another bank would suddenly throw gold and silver prices back toward new highs for the move. Sentiment in the financial markets has shifted definitively in favor of a “pause” from the Fed tomorrow, but we are not sure gold will see a large rally if the Fed takes a pass on hiking rates. We do believe gold and silver will find some minor speculative buying ahead of the Fed meeting but the reaction in gold prices to the Fed outcome is extremely difficult to predict. In a very disappointing development for the bull camp, both gold and silver have seen consecutive days of large ETF outflows with year-to-date gold and silver holdings both down by 1.3% year-to-date. However, a positive development for the bull camp today came from a 32% increase in Swiss gold exports last month with a large amount of those export going to China. In fact, Swiss exports to China increased by 122% to 58 tons while Swiss gold exports to India increased by 22.4 tons. Furthermore, Turkey continues to be a significant gold importer with the purchase of 43.9 tons of Swiss gold last month.
With a 4-day high this morning following a strong close yesterday the short-term bias in the copper trade has turned upward. In addition to a slight moderation of banking sector anxiety, the trade has also seen Chinese Imports of Russian aluminum double and copper saw an overnight forecast predicting new record highs in copper prices “within a year”. The consultancy predicting new highs in copper prices reiterated pre-existing market expectations of a significant jump in copper demand for the green energy transition but did not mention the relative tight ongoing global copper supply situation! However, the tight supply argument saw fresh press coverage overnight with indications that copper inventories in major Chinese physical markets sectors declined by 7500 metric tons on a week over week basis and fell a much more significant 43,700 metric tons from March 13th. Apparently, the aggressive dip in copper Chinese prices into last week’s lows prompted significant bargain hunting buying among Chinese industrial users.
Interested in more futures markets? Explore our Market Dashboards here.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.