Metals Update - Heraeus Metals Germany GmbH & Co. -
Gold started positively into the new year and has recorded a price increase by approx. 7.5% since the start of the year. The metal benefitted from the falling oil prices firstly as well as from the fears of a weaker global economy. Gold became more attractive again as a safe haven asset in this environment. The unexpected announcement of the Swiss National Bank to cancel the minimum Euro exchange rate led to a price increase by 2.5 % on Thursday and a weekly gain of 4.5%. Worried investors escaped from volatile investment classes into Gold: Thus, the SPDR Gold Trust which is the biggest Gold ETF had an inflow of 1.4 % on Thursday and of 1.9 % on Friday - this was the biggest daily percentage increase in almost 5 years. There is increased physical demand from Switzerland which is not surprising after the revaluation of the Swiss Franc: Gold dropped in local currency from 1,250 CHF/oz to approx. 1,050 CHF/oz temporarily. In Asia in turn buyers are hesitant due to the increased prices. Further information with regard to the Quantitative Easing program by the ECB to support the economy are awaited eagerly. While Gold should benefit by it monetary measures by the ECB will further burden the Euro. Currently Gold is not affected by the strong USD. This morning Gold trades at 1,275 $/oz and we also see good support for the metal in the coming days.
In the wake of Gold Silver’s character as a substitute currency and safe haven asset was also in the foreground past week. Thus, Silver could achieve a 7.5% gain throughout the week and resisted the overall devaluation seen in industrial commodities such as Palladium, Oil and Copper. The solid physical demand in the US thanks to an economic upswing surely also supported the price. This week, all signs point to a continued rise in price. Of particular interest is especially the ECB meeting on Thursday with a respective press conference afterwards at 2:30 pm and their information on the broadly based government bond purchase program. A respective flood of liquidity as well as ongoing low to negative interest rates could further drive investors into investment metals. Current support lies at 17.00 $/oz. After the resistance at 17.20 $/oz was broken on Friday, the next resistance level is at 18.00 $/oz.
Since end of December Platinum has been in an upward trend. After the metal opened at 1,227 $/oz, it closed with a weekly increase by 3 % at 1,264 $/oz. This morning Platinum is trading at 1,266 $/oz. Thus, Platinum got into the waves of gold which reacted to the Swiss National Bank’s decision on the annulment of the minimum rate of the Swiss Franc with a price increase. In Platinum we could not observe a particular increase in demand. Furthermore, there is news from the South African mines again. Thus, operations have been suspended at Northam Platinum since Friday due to extensive safety measures which should support the price increase. Platinum has thus broken through its daily cloud resistance and targets a new resistance level at 1,286 $/oz. On the charts we see support at 1,245 $/oz and at 1,238 $/oz. Due to the developments of last week and the price decline in Palladium the Platinum : Palladium ratio shot up as well. An ounce of Platinum currently equals 1.68 oz of Palladium. Looking forward we see Platinum well supported particularly through the European automobile industry which recorded a sales growth by almost 6% in 2014.
In the middle of the last week Palladium went through a hefty price decline. Thus, on Wednesday there was an intraday price decline of almost 40 $/oz. This equals a decline by almost 6% and thus is the biggest daily loss since June 2013. After opening the reporting period at 797 $/oz Palladium closed the week only at 751 $/oz. Palladium Futures also suffered the biggest decline since almost 7 months. The main reason for this is the price decline in industrial metals - particularly copper. This in turn has been triggered by the projections by the World Bank on the global economy lowering the growth rates for 2015 as well as 2016. Commodity markets reacted to this adjustment the most. Thereby Europe, Japan, Russia as well as parts of Latin America are in the main focus. Thus, sinking oil prices also play a significant role in this adjustment as oil exporters like Russia are strongly affected by the oil price plunge. Analysts believe that the declining Palladium price in this year is solely attributed to the repositioning of a few market players who would like to balance out their Pd Long positions/Pt Short positions. The oil price decline gives hope as the sinking oil prices provide further momentum to the growing automobile industry. As mentioned in our H1 2015 precious metals forecast there is a strong correlation between the Palladium price and the developments in the automobile market. Thus, we stay bullish in our expectations for Palladium. On the charts resistance for Palladium is at 778 $/oz and at 792 $/oz, support at 755 $/oz.
RHODIUM, RUTHENIUM, IRIDIUM
Rhodium has unfortunately not developed very positively in the reporting period and has undergone a development opposite to platinum. At the beginning of the week the price difference was “only” at 35 $/oz which has now shot up to 85 $/oz. Demand for Rhodium is currently very limited which is on the one hand due to the year just beginning and thus buyers being still a bit hesitant. On the other hand buyers who currently do not have to urgently cover a need are in a very comfortable situation as the available supply is relatively big and currently there is no risk of fast and strong counter movements. Regardless of the price trading significantly under the 1,200 $/oz mark again there have not been any large purchases yet. However it shall be noted that this is a price level which we have not seen for 6 months and thus is to be treated with caution.
Ruthenium is trading slightly weaker than in the past weeks as there have also been a couple of sellers at the beginning of the year in an already weak market. Sales were relatively high despite of the difficult circumstances and if purchases should remain on this current level then the 50 $/oz mark is surely a very good support line.
In Iridium there was immediately good demand right at the beginning of this year which slightly pulled up the price. In the reporting period the price increased by 15 $/oz and compared to our last report from 2014 even by 35 $/oz which is significant in percentage terms. We continue to see good demand coming from all Iridium applicants and see upside potential for the price in near future.
Senior Manager Sales und Marketing
Heraeus Metals Germany GmbH & Co. KG
Phone/Sales +49 (0) 6181/35-2760
Fax +49 (0) 6181/35-9444
Internet www.heraeus-edelmetallhandel.de Thanks!! Chad -