The European Central Bank (ECB) will continue to buy bonds beyond March 2017 and to thus pump liquidity into the market. This at least is the prevailing opinion among market participants after the press conference held by ECB President Draghi on Thursday, which put an end to the previous speculation about the end of this program. The Euro declined sharply as a result, trading against the US Dollar as low as last seen in March. This also put pressure on the Gold price, which fell to 1,261 $/oz by the end of last week, after trading at just below 1,274 $/oz before. In relation to the US Dollar’s strength, however, the losses for the precious metal were lower: Euro-denominated Gold could rise to 1,163.60 €/oz (= 37.41 €/g) on Thursday after starting into the week at 1,138.90 €/oz (= 36.61 €/g). Physical demand remains strong in this environment. In India, for example, the metal traded with a premium of up to 2 $/oz against the official price for the first time in nine months. Local demand for Gold usually increases in the fourth quarter due to various Hindu holidays as well as the wedding season. Chinese buying is also on the same high level as the week before. In China, the metal is priced with a premium of 4 - 5 $/oz on the international price. Demand had picked up after the Gold price had fallen sharply at the beginning of the month. German investors are still on the buyers’ side and we continue to see above-average interest in investment bars. Looking ahead, we expect the Gold price to test resistance at 1,269.30 $/oz (200-day moving average) again this week before the next resistance level at 1,274 $/oz comes into reach. The long-term sentiment of market participants for the metal is cautiously optimistic: According to a survey among delegates at the annual LBMA/LPPM conference last week, Gold will be priced at 1,347 $oz in one year and would hence trade around 7% higher than at the moment.
Silver still above 200-day moving average
For the second consecutive week, Silver trades in the same narrow range between 17.35 $/oz and 17.80 $/oz. The 200-day moving average continues to be a solid support and currently stands at 17.35 $/oz. Taking into account the persistently strong US Dollar, Silver holds up well, as the US Dollar index, which compares the US Dollar to a weighted currency basket, continued to rise sharply last week, nearly reaching this year’s high from January. Silver’s sentiment is still good; ETF holdings recorded a new record high last week. This week, we are likely to see a little more volatility, as key economic data is published almost every day. In the USA, for example, consumer confidence, durable goods, initial jobless claims and GDP Q3 are due. In Europe, the GFK consumer sentiment will be published as well as in Germany the Ifo Business Climate (Tuesday).
Platinum in decline despite a strong automotive market in Europe
Platinum’s decline continues and a move to as low as 900 $/oz cannot be ruled out. Despite the generally good demand at prices below 950 $/oz, the sentiment is rather negative. The next support level waits at 927 $/oz, and further below the "big figure" receives a lot of attention. Good news for Platinum comes from the European automotive market, where diesel engines have a high market share: Car sales saw a strong increase in September (+ 7.2%) compared to the same period last year. In particular Italy with 17%, Spain with 14% and Germany with 9% stood out. Demand for jewelry in China, on the other hand, seems to slow down, or rather, China’s general sentiment is currently rather modest - also towards Platinum. Beside the Gold price and the strong US Dollar this might be another reason for the weak Platinum price. The premium for Platinum sponge is still at a moderate level, despite rising industrial demand in response to lower prices.
Declining Platinum prices and declining demand in China are weighing on Palladium
In spite of rekindled demand, Palladium’s downward trend continues. Also from a technical perspective, it appears that the 600 $/oz mark needs to be in reach again in order to stop the “free fall” for good. Several important support levels were undercut and the drop below 630 $/oz confirms the still existing bearish tendency. Declining demand in China appears to bear - among other reasons - at least a co-responsibility. But also in the wake of the falling Platinum price, Palladium had to take losses. Palladium ETFs saw further outflows, reducing the stocks to a level of 2.02 million ounces. The premium for Palladium sponge has not changed since last week.
Rhodium defies the PGM price trend, Ruthenium is stable, Iridium is partly traded above price indications
Despite the still weak prices of Platinum and Palladium, Rhodium was able to gain ground and to escape the negative sentiment of the precious metal complex. However, this was to a lesser extent the result of industrial demand but of purchases out of the investment sector. In addition, there was a lot of interest from the automobile sector, so that we traded at the highest level since mid-May. Recent months have shown, however, that smaller rallies were rather used for profit-taking, than for follow-up purchases. Ruthenium continues to trade sideways. The very good availability and the currently relatively low demand certainly do not indicate a price rise in the near future. The supposed calming of the Iridium market is unfortunately somewhat deceptive. Even though "official" price indices still show the same level, the traded prices are at times much higher, suggesting very low availability. Potential sellers therefore still seize the opportunity and offer only small quantities at high prices. There are no signs that the environment will change fundamentally in the near future.
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