Written Commentary
GOLD / SILVER
With the dollar within last week’s range, and other precious metals markets tracking lower it is likely that gold is benefitting from flight to quality interest associated with the Ukraine affair. The gold market should draft support from news that the world’s largest gold ETF on Friday saw the biggest daily inflow since its inception in 2004. Unlike gold, the March silver contract breached a long-term downtrend channel resistance line last week at $24.27 and that downtrend line provides support today at $24.12.
PALLADIUM / PLATINUM
The upside breakout in the palladium market last week appears to have staying power, especially if the gains are being forged on the prospect of a disruption of supply from Russia in the event it advances on Ukraine. In short, political issues should keep palladium headed higher but we expect to see expanded volatility. As indicated last week, the impact of a Russian embargo might have a relatively smaller impact on platinum than palladium, but we still think platinum will rally along with palladium. Another positive for platinum came from a weekly ETF inflow last week of 39,954 ounces which brought the year-to-date gain to 1%.
COPPER
A significant Covid outbreak at the world’s biggest copper mine, and lower 2nd half 2021 copper production reading from BHP should help underpin copper against risk-off demand slowing fears. Apparently 312 cases were reported at the mine at the end of last week, with some sources suggesting the company had recently reduced Covid restrictions. However, there is pressure flowing from weakness in Australian mining shares overnight and from a story out of China indicating that 2021 saw their scrap copper imports jump by 80%.
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