Written Commentary
GOLD & SILVER
With a lower low and downside follow-through this morning, the October gold contract appears to be on track to trade below $1825. While the dollar has not carved out significant gains on its current bounce, the bull camp in gold is disappointed by the halt in the “downtrend” in the greenback. Part of yesterday’s large decline in gold was attributable to a jump in US treasury yields and some of the selling was reportedly the result of the opening of Shanghai. Apparently, gold and silver today see little spillover support from renewed strength in energy prices and a slightly positive take-away from Indian GDP readings.
PALLADIUM & PLATINUM
Unfortunately for the bull camp in palladium, the market failed to hold an 8-day high and carved out a wide trading range of $68 yesterday! Perhaps, early strength in PGM prices yesterday were the result of the announcement of the removal of three more Russian banks from the “Swift” bank settlement system. In other words, Russian exports of palladium and other physical commodities are probably becoming more difficult. However, the palladium trade thinks smuggling will keep global supply from tightening in the near term. While both PGM markets tracked higher early yesterday, only platinum held its gains and finished positive. While the platinum market held a net spec and fund “long” as of early last week, the spec and fund long has remained very modest indicating the market retains modest speculative buying capacity.
COPPER
Soft copper price action this morning in the face of positive global manufacturing PMI readings overnight and the inability to hold up yesterday in the face of the Shanghai opening gives the edge to the bear camp today. However, LME copper warehouse stocks continue to fall and should be providing offset to a market consistently concerned about sagging global demand. On the other hand, Chinese Caixin manufacturing PMI, French, Spanish, French and Euro zone manufacturing PMI readings for May were positive. Yesterday the copper market discounted soft Chinese data, higher treasury yields, a higher dollar, inflation fear and recession fear to reach the highest level since May 5th.
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