Written Commentary
GOLD / SILVER
Overnight Press coverage indicating surprise with the sharp slide in gold prices following the stronger than expected ECB rate hike yesterday highlights a constantly changing gold trade focus which at times is at odds with classic fundamental market reasoning. We see the action in gold and silver yesterday as a classic sell the rumor and buy the fact reaction to the widely anticipated ECB interest rate hike. However, periodic weakness in the dollar also contributed to the bounce of $33 off the early low in October gold and the $0.60 recovery in silver from its initial low.
PALLADIUM & PLATINUM
With the palladium market continuing to coil in a very tight trading range (albeit with a slight upward tilt) it appears that the sellers are backing away again perhaps because of a dearth of internal fundamental developments. In fact, trading volume in the palladium market this week could be the lowest in months perhaps because prices are perceived to be cheap with Russian supply disruption still possible and with a pre-existing large record net spec and fund short! The chart in platinum shifted positive yesterday with a 3 day low soundly rejected and the market forging a low to high bounce of $31. Like palladium, the platinum market is cheap versus historical pricing of the last 4 years and the market holds a near record net spec and fund short.
COPPER
While the September copper contract respected and definitively rejected a test of the $3.25 level again yesterday, the threat of softening demand orientated selling lives on in the wake of disappointing US jobs and manufacturing data. Countervailing the constant fear of demand destruction is a very significant 20,982-ton decline in weekly Shanghai copper warehouse stocks.
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