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The Tide Has Shifted Back to Bears


The bias today in gold and silver has shifted down in the wake of a 3-day high in the US dollar. The bear camp is also emboldened by a significant bounce in US treasury yields and from another large daily outflow from gold ETF holdings of 207,596 ounces. Fortunately for the bull camp in silver, silver ETF holdings saw an inflow yesterday of 2.8 million ounces. While early gains yesterday in gold were attributed to the range down move in the dollar index, the upside extension into the highs forged ahead of mid-session were thought to be the result of an escalation in tensions between US and Chinese military assets around Taiwan. Silver remains focused on slowing physical demand in the event of a global recession. Gold might also have benefited from the lowest US  treasury yields since April 5th in the Tuesday morning trade.


Now that the October platinum contract has regained the bottom of a consolidation pattern in place since last September, we suspect gains will be more difficult to engineer. After a surprise inflow to platinum ETF holdings on Monday, platinum ETF holdings yesterday declined by 3,059 ounces and holdings remain down 11% on the year. In a minor bearish development, South African platinum producer Royal Bafokeng reaffirmed initial production forecasts calling for their output to be within a range of 4.65 metric tons/4.9 metric tonnes. Like the platinum market, the palladium market has posted negative chart action overnight with the added negative a lack of a new high for the move.


While the copper market has spent a large portion of the initial trade today tracking lower on its charts, the September contract has respected yesterday’s low of $3.4485 and therefore that becomes a key pivot point in the early action. However, yesterday the copper market forged a very wide trading range of $0.11 and aggressively rejected a 5-day low off signs of improved Chinese copper demand. Another cushion for the copper market going forward is a spreading belief that global copper production will be steady to lower in the months ahead.

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