Palladium In Uncharted Waters

Palladium In Uncharted Waters

The U.S. Dollar is virtually unchanged this morning awaiting the release of the Federal Reserve’s January meeting minutes at 2 pm Eastern, which could bring more clarity to the future of rate hikes.

Investors will also be keeping a close eye on the U.S.- China trade negotiations and the action over the pond with Brexit.

In the meantime, Precious Metals are continuing to look positive, especially Gold and Palladium. Gold prices seem to be headed higher as investors diversify their portfolios and hedge against the uncertainties that the global economy faces. Palladium continues to be in uncharted territory driven by strong fundamentals and new investors wanting a piece of the action.

As of this morning, open interest in the March Palladium Futures contract still shows over 16,000 contracts as the longs roll their favorable positions forward and the nervous shorts hope this rally stalls right here.

The CFTC’s Commitment of Traders Report (delayed as of 1/29 because of the Government shutdown) released yesterday showed the large funds adding a whopping 25,000 contracts to their long positions. Looking back, this was done on Gold’s rally from $1,286 – $1,311, though there has been some significant short covering in gold’s $31 rally since then. There still should be a sizeable collective gross short position held by the large fund community. This nicely sets up the Gold market to continue moving higher as these shorts give up their positions. If they do capitulate, I expect their move will help accelerate the market to higher levels.

Have a wonderful Wednesday.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.