Market Reports


Heraeus Precious Metals Update

Gold price at 3.5-month high

Gold’s start into last week was initially subdued, with the week’s low being marked at 1,226 $/oz on Tuesday. There, the yellow metal changed gear and was not stopped for the rest of the week. It recorded a price increase of approximately 2.8% until Friday, and with 1,260 /oz climbed to the highest level since November 2016. This increase did not go unnoticed by investors in the Euro area either, where Gold also reached a 3.5-month high with a rise by more than 26 €/oz to 1,190 €/oz. Several price drivers can be held responsible for this move. The debate on the US's nuclear rearmament on Friday, the continuing uncertainty regarding US domestic and foreign policy as well as the Fed's disagreement regarding the timing of the next rate hike in the Dollar zone are all lending support to Gold. Persistent speculation about Greek fiscal policy and looming elections in The Netherlands and France are contributing to the geopolitical uncertainty on the part of the European continent. This is reflected in the increase in ETFs, which rose by over 3% in February. In principle, we continue to see Gold well supported – overcoming resistance at 1,249 $/oz may suggest higher prices. We see the next resistance level at 1,278 $/oz and also the 1,300 $/oz mark is moving into the sight of investors. Short-term profit taking could, however, somewhat slow the current uptrend.

Silver continues in the upward trend

Since the first half of the week was dominated by a strong US Dollar and rising stock markets Silver marked time at first before it was able to gain momentum in the second half of the week. The Fed's latest meeting minutes were more cautious regarding the anticipated interest rate hikes than the market had expected. There were also no further details on the US tax reform. As a result, the US Dollar as well as yields on US government bonds declined while the metals appreciated across the board. The rekindled flight into safer alternative assets was also reflected in a rally for bitcoins, which gained the highest ever value against the US Dollar (+21% YTD, thereof +12% last week). Silver reached the highest level in over three months with 18.40 $/oz, but was unable to develop its own positive momentum, thus leaving the gold-silver ratio unchanged. This is also related to technical resistance at 18.50 $/oz. Support is waiting at the 200-day moving average of 17.95 $/oz. The outlook remains bullish.

Platinum benefits from EU car sales

Platinum started last week with losses and we traded below the 1,000 $/oz mark again. However, support at 987 $/oz was defended and the metal recovered quickly in the wake of Gold’s performance. Due to the yellow metal’s rapid rise, Platinum also managed to reach a level of just below 1,030 $/oz, which needs to be sustainably exceeded, however, before higher prices are feasible. Compared to 2016, car sales in the European Union rose by 10.2% in January 2017, from which the PGMs, primarily Platinum, benefited. Considering this development we believe that Toyota’s announcement to have produced a smaller catalyst with 20% less precious metal content will have little effect on the price, since this process is to be mainly applied to hybrid vehicles. However, upcoming economic news as well as US interest rate decisions should make the next few weeks exciting. Other interesting news stories this week were inter alia the sale of the Union Mine by Anglo American Platinum to Siyanda Resources and Northam’s purchase of Glencore's Eland Mine, which had to be closed due to declining prices in 2015.

Strong volatility in Palladium

Palladium is currently the most volatile of all precious metals, proving this status again last week: After failing at the 800 $/oz mark last Friday, the price stabilized around 785 $/oz in order to drop to 770 $/oz after the announcement from Toyota (see Platinum report). Currently it is trading around 779 $/oz. In general, Palladium responded more modestly than Platinum to the latest macroeconomic developments, which are supporting the current uptrend of Palladium’s sister metal. According to the latest figures published by the largest Palladium producer Norilsk Nickel, production of about 2.64 - 2.73 million ounces is expected this year, which would be a significant increase compared to the previous year. However, the persistent deficit between supply and demand would still not be covered. For this reason, market players continue to be bullish about Palladium.

Rhodium’s uptrend persists; Ruthenium trades without changes; Iridium still sough-after

The positive trend mentioned in our previous report continued in this reporting week. Demand for the currently third most expensive metal Rhodium is unbowed. It seems that some consumers have been surprised by the recent performance. Waiting for the market to calm down did not serve them well as it simply did not happen, resulting in a certain “need for action” driven by acute demand. This has pushed the price up and we are trading 30 to 40 $/oz higher than last week. We have to see whether potential sellers will continue to sell in this environment of strong demand, thus stopping the movement and maybe even cause a small correction. With regards to Ruthenium, we saw again greater demand out of Asia. Yet the market is still tight and competitive and there are no significant changes to prices.

Iridium continues to be sought-after, but turnovers were lower than in the previous weeks due to the now obvious price increase. The overall situation with limited availability has not changed. We continue to believe that in the medium term the price has room to further increase.

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  • Rhodium
  • Gold
  • Silver
  • Iridium
  • Palladium
  • Platinum
  • Ruthenium

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