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.
Head of Marketing & Communications
Global Business Unit
Heraeus Metal Management
Marketing & Communications
Heraeus Deutschland GmbH & Co. KG
Phone: + 49 6181 / 35-9648
Mobile: + 49 1590 / 4010522