Politics, Policy, Economics - Since 2010

GOLD - Gold supported in the short term Financial markets continuously show strong volatility. After significant losses in the previous week...

Precious Metals Market News

GOLD - Gold supported in the short term

Financial markets continuously show strong volatility.

After significant losses in the previous week, stock markets partly record significant gains last week. On Thursday, the oil price increased by more than 10%, a jump that was last seen in 2008. This development was mainly triggered by China’s interest rate cut as well as by surprisingly positive economic data from the US and Europe. Gold on the other hand was rather on the losing side: After the metal opened the week at 1,168 $/oz, the price dropped down to 1,117 $/oz on Wednesday and only slightly recovered to 1,134 $/oz on Friday. The economic situation in China and timing of the expected interest rate hike in the United States remain in the major focus of market participants. Contradictory signals came from the US Fed: while domestic economy shows a positive development, growth slows down in emerging countries. Thus, expectations increasingly shift towards an interest rate hike in December instead of September. This should give support to the Gold price, at least in the short term. We therefore do not expect the metal to drop below 1,100 $/oz in the near future. Technically Gold get support at 1,117 $/oz, upwards resistance is around 1,148 $/oz and 1,170 $/oz. 

After the Euro was not able to maintain its gains and fell from over 1.17 to below 1.12 Gold recorded significant gains in Euro terms: The price increased from 979 €/oz mid-week to 1,015 €/oz at the end of the week.

 

SILVER - Weakest level since 2009

Subdued industrial demand determines price development.

For the first time in 6 years, Silver briefly fell below the mark of 14 $/oz on Wednesday. The Gold/Silver-ratio rose further to 80. At the end of the week the Silver price could increase slightly due to more robust economic data, rising oil prices and recovering stock markets, however the metal still trades on a very low level. Worries about an economic slowdown in China and in other emerging markets, overall low oil prices and volatile stock markets suppress industrial demand for the metal. This subdued outlook for industrial demand currently appears to be the main driver of the Silver price development, whereas its character as "safe-haven" investment fades into the background. While Gold as a "safe haven" rather benefits from a postponed rate hike, Silver remains under pressure. However, the physical demand could pick up significantly due to the low price levels, particularly in the middle of last week.

 

PLATINUM - Sentiment remains subdued

After significant losses Platinum picks up at the end of the week.

After a strong week with prices over 1,000 $/oz Platinum could not oppose to the pressure of falling commodity prices. In a still volatile market a price level above 1,035 $/oz could not be achieved and the price of the metal fell midweek to below 970 $/oz. Due to the continuing tense situation in South Africa, and the persisting latent risk of a supply shortage Platinum was under less pressure than its sister metal Palladium. Despite the fact that the market prevails in a negative mood, Platinum was able to climb again to over 1,000 $/oz later in the week. On the other end of the scale the six and a half-year low of 945 $/oz could be within reach. Even with prices falling industrial demand remained weak, which is also reflected in the low sponge premiums we currently record.

Platinum has been at a discount to Gold for 8 consecutive months. So far, this is the longest time period in which the Gold/Platinum ratio has continuously traded below parity.

 

PALLADIUM - When will prices touch bottom?

Weakening automotive industry causes significant losses.

With prices below 530 $/oz Palladium dropped to a five-year low last week. Although the metal could partly recover and reached 590 $/oz shortly before the weekend, the overall mood remains poor. Palladium in particular suffers heavily from decreasing demand in the automotive industry. The news are dominated by downwards adjustments of auto sales forecasts for important markets such as China, Russia and Brazil. At the same time Platinum production has recovered to pre-strike levels. Technically, the next support for Palladium is around 500 $/oz, a break of this mark could set into motion a further downward spiral. However, this scenario still seems far away right now. In EUR the price briefly fell to less than 15 €/g, however, even below this threshold no increased buying interest could be observed.

 

RHODIUM, RUTHENIUM, IRIDIUM - Rhodium again under pressure

Ruthenium and Iridium without substantial revenues.

In the course of softer prices during the last week, the subdued sentiment did not pass by Rhodium and the market recorded a price decline. Demand for the metal remains cautious, mainly investors’ sales can be observed.

For Ruthenium and Iridium, the week was extremely quiet and uneventful. We experienced a very low level of market activity and hardly notable demand for both metals.

Have a great week.

 

Martina Fischer
Head of Marketing & Communications

 

Global Business Unit

Heraeus Metal Management

Marketing & Communications

 

Heraeus Deutschland GmbH & Co. KG
Heraeusstrasse 12-14

63450 Hanau, Germany

 

Phone: + 49 6181 / 35-9648

Mobile: + 49 1590 / 4010522

E-Mail:  martina.fischer@heraeus.com

Web:     www.heraeus.com

HSBC says "we are lowering our platinum group metals (PGM) and silver forecasts across the board in light of the China- inspired commod...

HSBC PGM & SILVER PRICES SLASHED

  • HSBC says "we are lowering our platinum group metals (PGM) and silver forecasts across the board in light of the China- inspired commodity-wide sell-off"
  • HSBC sees platinum to average $1,126 per ounce in 2015 and $1,235 per ounce in 2016
  • HSBC lowers silver price forecasts for 2015, 2016 to $15.60 per ounce and $16.90 per ounce
  • HSBC lowers palladium price forecasts for 2015 and 2016 to $701 per ounce and $725 per ounce respectively
  • HSBC says, "we have revised our average 2015 and 2016 forecasts to $1,160 per ounce and $1,205 per ounce, respectively" for gold price (on 27 July 2015)

While China's stock markets seldom reflect the true nature of the economy, the plunge, coupled with Beijing's unexpected currency de...

Fed Rate Hike August 31

While China's stock markets seldom reflect the true nature of the economy, the plunge, coupled with Beijing's unexpected currency devaluation in mid-August, has dented confidence in the government and added to fears that the economy may be at risk of slowing more sharply than earlier expected. - Rueters 

He has very strong points in this post -  Oil prices are falling, seemingly inexorably. Emerging market countries are having currency crises...

The Global Economy Is Looking Very 1990s - Justin Fox

He has very strong points in this post - 

Oil prices are falling, seemingly inexorably. Emerging market countries are having currency crises. A previously unstoppable East Asian economic power -- the world’s second-largest economy -- is slowing, and the country’s leaders at times seem to have lost the plot. Russia is an economic mess. Europe’s economy is being held back by German political decisions and doubts about the common currency. The U.S. economy is relatively strong, but is beset by a productivity paradox in which remarkable Silicon Valley innovations don’t seem to be having an impact on the economic data.

Is this year starting to feel like it belongs in the 1990s, or what?

http://www.bloombergview.com/articles/2015-08-21/the-global-economy-is-looking-very-1990s

OPED from Larry Summers, WaPo - Interesting read, interesting take from Larry -   First, the era of agreements that achieve freer trade in t...

Larry Summers On TPP

OPED from Larry Summers, WaPo
- Interesting read, interesting take from Larry -  

First, the era of agreements that achieve freer trade in the classic sense is essentially over. The world’s remaining tariff and quota barriers are small and, where present, less reflections of the triumph of protectionist interests and more a result of deep cultural values such as the Japanese attachment to rice farming. What we call trade agreements are in fact agreements on the protection of investments and the achievement of regulatory harmonization and establishment of standards in areas such as intellectual property. 

GOLD - Rising US interest rates and weak signals from China After the metal broke through the important mark of 1,100 $/oz, Gold is at a lev...

Precious Metals Update

GOLD - Rising US interest rates and weak signals from China

After the metal broke through the important mark of 1,100 $/oz, Gold is at a level that was last seen 5 years ago.

While a rate hike by the US-Fed is still expected this year, the last FOMC meeting on Wednesday has not given any clear signal as to whether it will take place in September or December. The development of the US labor market is considered as the most important criterion to determine the effective date. While the current positive data could suggest an early adjustment, other factors such as the low price of oil, rapid losses on the stock markets in China and the euro crisis put pressure on the overall sentiment.

GFMS’ latest quarterly Gold report, which was released last Tuesday, shows an overall restrained demand for Gold. The research firm estimates the global physical Gold demand in Q2 to be at its weakest since 2009. The main reason is a significant slowdown in demand from China, where the jewelry sector was down by more than 23%. A few positive signals came from the German market; low prices attracted buyers and resulted in increasing demand for investment bars. Confidence in Gold as safe haven investment seemed to suffer a setback in recent weeks. ETFs showed significant outflows: with ETF-holdings reduced by more than 2 million ounces between the beginning and end of July.

 

SILVER - Firmer than Gold

Silver takes advantage of its versatile character.

Unlike Gold, an increased demand for silver was recorded in the 1st half year 2015. For the full year 2015, the Silver Institute forecasts a 5% increase in jewelry demand and a 2% growth in demand for industrial applications. The Gold/Silver ratio improved slightly in favor of Silver and is now at 73.50 (July high: 76.50) However, speculative short-positioning at CME has reached a record level. Sudden and abrupt short covering rallies that lead to short-term price gains cannot be ruled out and are even highly probable. Technically, Silver gets solid support around its 2014 low at 14,53 $/oz. Resistance is seen at 15.00 $/oz.

 

PLATINUM - Price stabilizes at low level

After the reduction of speculative long positions, Platinum appears to have stabilized below the psychological mark of 1,000 $/oz.

Similar to Gold, Platinum trades at a price level that could be observed more than 5 years ago. The discount of Platinum to Gold has meanwhile reached 115 $/oz. As long as the support at 970 $/oz is not broken, a price increase to levels of 1.060 $/oz seems to be possible. With prices on such a low level, the pressure on the South African mining industry continues to increase. Two of the largest platinum producers, Anglo American and Lonmin, recently announced restructurings and production cuts in the mid-term, however, opinions differ as to whether these measures could be implemented in due time. Political pressure on the miners as a critical industry sector, combined with the producers’ need to upkeep cash-flow, could be limiting factors. Sponge premiums on a low level reflect restrained industrial demand for Platinum. Some positive news comes out of China; for the first time since mid-June, increased buying interest could be observed at the SGE.

 

PALLADIUM - Palladium with cautious outlook

Weak forecast for China’s auto market puts the metal under pressure. Trading ranges between 608.50 $/oz and 631.50$/oz

While Palladium outperformed the other precious metals last year, the metal now suffers heavy losses. Since March 2015 the price fell by 25%, mainly due to increasingly subdued outlook for automotive production in China, the important growth market for gasoline engines.

Support for Palladium is currently around 613 $/oz, resistance at 653 $/oz, but the 600 $/oz mark looms on the horizon. Restrained industrial demand might be an indicator that buyers wait for prices below the psychological mark of 600 $/oz. 

 

RHODIUM, RUTHENIUM, IRIDIUM - Mid-term sentiment negative

Difficult situation of the South African mining industry does not stop at Minor PGMs.

Despite a relatively limited primary supply and a good physical demand at the same time from major consumers such as the automotive and chemical industries, the Rhodium price has come under heavy pressure. The trading environment can be described as nervous and difficult, investors are partly active to liquidate positions. The Rhodium market shows a volatility that has not been observed for quite some time.

The largest industrial consumer of Ruthenium is the electronics industry for storage media. Despite high metal availability and prices on a low level, very little demand can be observed. There is a strong interest among consumers for price hedges, however, few transactions are closed. The Iridium market remains relatively quiet. Physical demand for the metal remains restrained. Nevertheless, the low prices barely induce market participants to hedge prices.

 

Have a great week!

 

Martina Fischer
Head of Marketing & Communications

 

Global Business Unit

Heraeus Metal Management

Marketing & Communications

 

Heraeus Deutschland GmbH & Co. KG
Heraeusstrasse 12-14

63450 Hanau, Germany

 

Phone: + 49 6181 / 35-9648

Mobile: + 49 1590 / 4010522

E-Mail:  martina.fischer@heraeus.com

Web:     www.heraeus.com