Written Commentary
GOLD & SILVER
We are not sure how to justify the strong range up extension in gold and silver this morning, except for relief buying. The 50-basis point rate hike by the Fed yesterday was expected, but apparently a portion of the markets expected more hawkish forward dialogue than was presented. The new focus of the precious metal trade could be the action in crude oil and energy prices which posted significant gains in the Thursday action and that in turn could revitalize inflationary expectations.
PALLADIUM & PLATINUM
In general, the PGM markets have “delinked” with the gold market in a sign that the focus of the trade is drifting back to classic physical supply concerns. Some traders think Russia will find a way around sanctions and establish new willing importers but switching normal marketing channels could take time. The bulls maintain a technical edge with the market solidifying consolidation support at $2,200 and the net spec and fund positioning likely remaining “net short”. Despite a lack of material developments, the platinum market continues to extend the rally off the April lows.
COPPER
With a significant range up move rejected overnight, a very disappointing Chinese services PMI reading for April, and a significant 14,325-ton increase in daily LME copper warehouse stocks, the copper market has fundamental resistance to start today. The copper market should derive support from a month over month again in monthly US total vehicle sales from yesterday but a recovery in the dollar early, choppy to lower US equity market action and a lack of upside momentum in crude oil probably deters buying breaks.
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