OUTSIDE MARKET DEVELOPMENTS: Global equities were mixed overnight with the CSI 300, Hang Seng and IBEX trading lower and most other measures posting gains. The highlight of European trading session was the October IFO survey of German business climate which hit the highest level since April of 2014. The markets were also presented with Italian August Industrial orders and sales gains and that generally fostered a risk-on vibe to start the Tuesday action. The North American economic calendar will start with the October Case-Shiller home price index which is forecast to hold steady at a 5% reading. An October reading for the Conference Board’s consumer confidence measure is expected to see a moderate decline from September’s 104.1 print, while the Richmond Fed’s manufacturing index will be released at the same time. Atlanta Fed President Lockhart will speak during early afternoon US trading hours.
GOLD / SILVER: The gold market was clearly buffeted yesterday by strength in the Dollar and renewed talk of rising US rates but it has managed to throw off the bear tilt to start today. However, seeing talk of a November US rate hike from a Fed member on Monday was clearly a fresh bearish development for gold and other commodities as that in turn gave the Dollar fresh strength. Fortunately for gold and silver bulls the Dollar has not forged a fresh new high for the move overnight and that has allowed gold to play some catch-up to the rest of the precious metals complex. While some Press outlets were touting longer term fund interest in gold yesterday, the trade remains watchful of the direction of gold derivative holdings after the sharp outflow at the end of last week. Unfortunately GLD’s holdings held steady on Monday and that leaves the investment track somewhat lacking. While we leave the near term edge to the bear camp in gold, we can’t rule out a rise back to the $1,275 level today as the looming start of the Diwali festival should provide some support going forward especially when one considers the pattern of gains in the Rupee since the early September low and the fact that the Indian economy is largely agriculturally based and production from the Ag sector was strong this year! However, the strength in silver prices yesterday was really surprising in the wake of Chinese silver import data for September that showed a 3.8% decline, especially with the year to data silver import tally also showing a decline of 6.2%!
PLATINUM: The platinum market surprised the trade with a sharp range up short covering move yesterday and it continued that recovery in the early action today. Surprisingly strength over the last 30 hours has been seen in the face of news that Chinese September platinum imports declined by 17%. With year to date Chinese platinum imports also falling by nearly 15%, the rally on Monday was actually a little prolific. Perhaps an increase in palladium imports into China, strength in global equities and an overall improvement in global economic sentiment has fostered short covering in the PGM complex after the failure to extend the downside move over the last two weeks. Seeing gains in the PGM complex in the wake of the wage deal last week would also seem to suggest that traders are seeing some bargain hunting buying especially with the markets overnight presented with news that South African Amplats saw 3rd quarter platinum production rise by 1%!