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Vulnerable Status on Dollar Strength


While gold is showing chart vulnerability early on, the action in the Dollar could accentuate that given the Dollar’s upside break to the highest level since July 10th. Another major negative for both gold and silver today is the fourth straight daily outflow from Gold-ETF holdings with the significant outflow of 210,167 ounces. Silver also saw investors flee ETF instruments with 1.7 million ounces moved to the sidelines.

Gold Bars and US Currency


Despite making a new low for the move and the lowest trade since July 12th, platinum prices came screaming back and at times were $36 above the early lows. While not a direct and definitive lift, we suspect the latest Chinese stimulus (this time focused on improving household incomes) served to lift Chinese demand prospects for PGM supply. Palladium continues to be one of the quietest markets, nearly replicating the very narrow and extended sideways trade in the natural gas market. Therefore, a Reuters poll from last week projecting palladium prices to average $1,320 in the third quarter is surprising unless the outlook for China improves dramatically.


While copper prices have fallen back in the wake of soft Chinese Caixin Manufacturing PMI readings for July, the magnitude of the declines is limited especially in a market fresh off a rally of $0.17 cents off last week’s low. While we hesitate to suggest that the latest Chinese stimulus (an effort to stimulate household incomes/spending) was responsible for the impressive rally to the highest level since April 21st, the copper market historically has confirmed China as the most important fundamental demand zone.


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