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Weakness in Gold Prices


Weakness in the gold and silver prices today is a very bearish development as a-number-of factors should have provided lift to the markets. In fact, last week gold and silver appeared to be tracking physical commodity market developments and yet further strength in equities and upbeat Chinese data has been discounted this morning in favor of ideas that the pace of Chinese growth is leveling out.


Like the rest of the precious metals markets, the palladium market was hit hard last week but did appear to respect what has been fairly solid support in the recent past at $2,200. The palladium market has a much better chance of delinking with the rest of the precious metals markets primarily because of its demand expectations are linked to China and economic news from China overnight was generally supportive. While the platinum contract is not showing significant gains this morning, it continues to recoil from last week’s hard washout and might be catching some fresh buying from news that platinum ETF’s on Friday added 19,525 ounces to their holdings, with total ETF holdings last week increasing by 34,383 tons.


Not surprisingly, the copper market has shown some bullish reaction to news that Chinese corporate profits managed to gain for the 4th straight month. However, some economists suggested the reading represents a “cresting” of the recovery and that discourages some buying. While global equity markets were higher overnight, Chinese equity market action was negative to copper prices as was a report that Chinese aluminum “supply/imports” have reached unprecedented levels.


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