David Fuller's view Yesterday's assessment of commodities concluded with a review of CBT grains and beans, because of the dramatic rallies caused by the heatwave in Midwestern USA. Today, I will have another look at precious metals, due to general interest and following the recent firming within ranges.

I have written and particularly talked about gold at some length so there is no need to review all the recent comments. Bullion remains in a narrow range near its September and December lows, as you can see most easily on this daily chart. The latest rebound which commenced last Thursday included more upward dynamics. This tendency for gold to rally more quickly than it declines within the current range (we call it trampolining at TCS) suggests that demand is strengthening. If most of these latest gains are now held during a brief pause near the June rally highs, support for an upward break will increase. The weekly chart shows evidence of support building near current levels and this would be confirmed by a sustained break back above the 200-day MA, which I expect.


Silver (weekly & daily) has a similar pattern although it has been much more volatile. I maintain that silver is a high-beta proxy for gold, so it will take its cue from the yellow metal. Platinum (weekly & daily) also shows evidence of support building near its yearend trough and its latest upward dynamics have been the strongest of the four futures-traded precious metals. With platinum being a less liquid market than gold, trading at an atypically lower price and mainly produced in South Africa where there are some supply concerns, it may outperform gold on the next upside move. Palladium (weekly & daily) looks the most top heavy of these precious metals, although it too is finding support near the yearend lows. Of this group palladium should benefit the most from economic recovery.

In conclusion, the best case outlook which I am currently backing is for a brief pause by precious metals, followed by upside breakouts from current ranges led by gold and platinum. Declines beneath the recent lows are required to negate or at least delay this prospect.

(See also A review of gold in various currencies posted on 12th June, plus Eoin's comments on oil below.)