Precious Metals Update
GOLD - Uptrend is losing momentum
Short-term losses possible.
The eagerly awaited US jobs data on Friday provided a mixed picture. Although August figures were disappointing, data for June and July were revised upwards at the same time. The price of Gold initially rose to 1,130 $/oz, but could not hold those gains and closed the week trading at 1,122.60 $/oz. A rate hike in the US currently moves to the distant future. Meanwhile there is market consensus that the Fed will not turn the interest rate screw in their meeting next week. A rate hike in December or even at the beginning of 2016 is becoming increasingly likely. Quite different situation in the Euro area: the ECB emphasized on Thursday that it is prepared to continuously increase liquidity of the financial system. Apart from the uncertainties around China and the situation in the emerging countries, the adjustment of the inflation forecast for the coming year from 1.5% to 1.1% is considered as the main driver. After Gold has not managed to test its mid-August highs, we now no longer rule out short-term losses, a drift down to 1,110 $/oz is possible. The next support is then at 1,080 $/oz, resistance forms around 1,148 $/oz and 1,170 $/oz. The subdued physical demand in Europe is accompanied by a stable demand in Hong Kong at a low level. Although market participants use price corrections to stock up, but we are not seeing any extensive buying interest.
SILVER - Little price movement
Silver shows most stable performance among precious metals.
Last week, Silver could recover from its lows just below 14 $/oz, but on its way up found resistance at 15 $/oz and did not manage to overcome this mark. Volatility over the week was relatively low, obviously the market is unclear about the direction in which to proceed. Compared to the other precious metals, Silver performed relatively strong and, as a result, the Gold/Silver-ratio moved away from its peak at 80 and is now again around 76.
We continue to observe high physical demand for bullion and grains, especially from Germany and the US.
The possible extension of quantitative easing measures by the ECB led to a loss of the Euro against the US dollar, therefore the Silver prices gained more clearly in the common currency.
PLATINUM - Demand remains subdued
Mining industry facing considerable changes.
Last week, Platinum established itself above the 1,000 $/oz mark, but suffered some profit-taking at the end of the week. However, a drop far below the $ 990 $/oz mark is currently not expected. The metal is now trading in a range between 990 $/oz and 1,020 $/oz, a break-through above 1,025 $/oz could result in an upward movement to over 1,040 $/oz. Support is currently at 945 $/oz. Industrial demand generally remains subdued, the weaker Chinese economic expectations are still in focus.
Recent news from South Africa reflects the growing pressure on Platinum producers. Although the government and mines agreed on concrete measures to avoid job cuts last week, experts doubt whether these actions may be effective due to the overall tense situation. At the same time, Impala’s announcement attracted quite some attention. Due to the low price level, the second largest Platinum producer will close shafts scaling back output by 180 koz of Platinum over the next 5 years.
PALLADIUM - Volatility continues
Prices above 600 $/oz currently not in sight.
Particularly in the beginning of the week we saw a high price volatility in Palladium. On Monday the metal traded in a range of 25 $/oz. Technically, support for Palladium is now at 572 $/oz, while resistance forms at 604 $/oz. Despite lower prices, we cannot observe increased demand for the metal. ETF holdings decreased significantly, we recorded total outflows of more than 34 koz. Even an overall strong demand from the United States in the course of the year seems unable to stimulate the palladium price. According to recent news, analysts now calculate with sales of 17.8 million vehicles for the full year 2015. This represents an increase of 500,000 units compared to the previous forecast and would represent the strongest year since 2001.
RHODIUM, RUTHENIUM, IRIDIUM - Rhodium in downtrend
Slight rise in prices for Ruthenium and Iridium.
The downward trend in Rhodium continues and the price dropped by another 25 $/oz last week. Consumers seem to have little confidence in lower prices, since the metal is on a multi-year low and in recent weeks, rallies were rather used to sell instead of making further purchases. Trading activity is on a relatively low level, but interest of the manufacturing industry, such as automotive and chemical industry, is definitely present.
Demand for Ruthenium has picked up noticeably, which is also reflected in a slightly firmer price. The price is relatively well supported as Ruthenium trades on a 11.5-year low. Purchases have been completed both by consumers from the electrochemical as well as from the electronics industry.
After some quieter weeks of "summer lull" we could also observe greater interest in Iridium. The price has gained some momentum and now trades around 15-20 $/oz higher than in the precedent week.
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
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