Written Commentary
GOLD / SILVER
Gold and silver prices deserved some liquidation pressure yesterday in the wake of inflation news that is unlikely to discourage the US from a jumbo rate hike next week, but in our opinion the washout in most markets yesterday was excessive. The markets will be presented with additional inflation measures from the US later today and that could result in follow-through selling in both gold and silver. Market expectations for today’s producer price index reading matches the trades expectations for the US CPI report yesterday which increases the odds of gold and silver price posted more declines.
PALLADIUM / PLATINUM
With four of the last five trading sessions in Palladium posting massive trading ranges and the September palladium’s trading range already robust at $267, the market might have posted a quasi-blowoff top. With December palladium yesterday failing to hold two retracement levels off the September low to high rally in palladium, the charts also favor the bear camp. Like palladium, the platinum market has forged a significant $118 September range and produced what could be a blowoff top and reversal on the charts yesterday.
COPPER
We continue to “watch” for headlines from China closely for signs of further lockdowns, but we also monitor the headlines for a surprise Chinese stimulus package. Earlier this week we were uncomfortable bidding copper prices higher with the ongoing potential for additional Chinese city lockdowns. In a minimally positive development, Reuters is reporting that China might see a change in their economic leadership, with Reuters reporting that “reformers” might bow out. Even though the markets overnight were presented with news that the Chilean labor Union rejected “a voluntary mediation offer at Escondida’s largest copper mine”‘ the market did not show a bounce. Even if US PPI shows a contraction today, we doubt that will turn the negative pendulum in commodities to the upside.
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