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China’s service PMI gets served, base metals lower
Covid reared its ugly head again on economic data, which saw China’s service PMI contract at its fastest pace since the pandemic.
For a month of ‘heavy metal’, gold hasn’t done too badly
To say March has been a volatile ride for metals would be an understatement. Yet despite sustained losses for palladium and platinum, gold seems less willing to break lower.
European Open: Palladium set to track gold higher?
Whilst gold has stolen a few headlines this week, we see the potential for palladium to make a rally of its own.
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Weekly COT report: Net-long exposure to gold fell sharply last week
Given the lacklustre bounce on gold alongside a rise in short bets and closure of longs last week, we retain the view that its recent bounce is corrective.
Weekly COT report: Divergences form between FX prices and trader positioning
As the data was compiled ahead of the FOMC meeting its likely there are some distortions in this week’s speculative positioning report.
Weekly COT Report: Pound Shorts Intensify
Traders were their most bearish on British pound futures in 17-months, according to last week’s commitment of traders report.
Asian Open: IMF Trim Global Growth Expectations for 2021
Bond markets continued to price in concerns of stagflation overnight, with yields at the long-end of the curve falling as the IMF trimmed their growth forecasts.
Gold finally set for bullish breakout?
After a sharp BOJ-inspired drop this morning, Western equity markets were able to turn slightly higher in the afternoon. Sentiment was partly boosted by the still-rallying oil prices as well as robust earnings from Facebook which helped to lift the social network to a fresh all-time high. Other commodities also rallied as the dollar sold off on the back of a weaker-than-expected first quarter US GDP estimate. This helped to push expectation about the next Federal Reserve rate increase further out, boosting the appeal of non-interest-bearing precious metals in particular, some of which had already been in high demand. Gold, silver and platinum ignored the rebound in stock markets and rallied across the board, with the latter breaking out to a new high above last week’s peak of $1042, thus triggering further momentum buying interest. Silver was approaching $17.70, a key level which we highlighted in one of our reports on Wednesday.
Precious metals surge
Precious metals are surging across the board, with silver and now platinum looking particularly bullish. As we reported on Tuesday, the pressure has been building for precious metals like silver to explode higher in recent months. The significantly weaker dollar has helped to underpin several buck-denominated commodities of late. The US currency has depreciated because of receding expectations about the pace of interest rate rises. According to the Fed Fund Futures, the likelihood of a rate hike by December is now only 50 per cent. Other major central banks have also either turned more dovish or maintained their extremely loose policy stances. The ECB is likely to echo this sentiment today, while the Swedish central bank has already decided to expand its QE package this morning.
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