Heraeus Precious Metal Update
Highest level since January 2015
Weak US economy and dollar support gold price
Is the US rate increase now also for June off the table? The Fed at least has become more cautious again during their April meeting last week and left its key interest rate unchanged in a range between 0.25 and 0.5 percent. US economic growth had slowed down a bit recently. The gross domestic product grew only by 0.5 percent year on year, which analysts consider to be "close to stagnation". This is weighing on the dollar and supporting the Gold price. The precious metal reached on Friday with 1,296.10 $/oz, its highest level since January 2015. Purchases by investors had previously driven the price of the metal through the upper side of the recent trading range (1,210 - 1,260 $/oz), triggering further buying. Market sentiment remains positive and we do not rule out further gains. The next resistance level lies now at 1,300 $/oz, followed by 1,306.50 $/oz, the highest price in January last year. Setbacks after such a rapid rally are, however, not unlikely as it may result in profit taking. A first technical support level wait at 1,270 $/oz. China is meanwhile improving the infrastructure of its Gold market. After introducing the first fixing in Yuan in Shanghai a few weeks ago, the Hong Kong "Chinese Gold and Silver Exchange Society" is working on a stock and trading center for Gold. The storage area will reportedly be located in the free trade zone Qianhai - with the intention to simplify customs clearance between the mainland and Hong Kong as well enabling the storage of precious metals.
Silver one of the best investments in 2016
15-month high with price just below 18$/oz
Silver had another strong week (+ 5.2%) and moved gradually through higher peaks and lows within a steep upward trend. Good data from China, as well as a "dovish" perceived decision by the Fed supported the metal. Last week’s high was just below 18 $/oz, where both the psychological and technical resistance are found now. The long positions in the futures markets are close to record highs. It is therefore possible that profit taking sets in at any moment leading to price corrections again. On the other hand, the word that Silver is with +29% one of this year’s best performing assets has now spread. Investors who have not yet got involved, will now climb on the bandwagon. In this regard, the ETF stocks are in focus, which are only 2.5% away from the all-time high in 2014. Technical support lies currently at 17.50 $/oz.
Platinum touches 1,085 $/oz
Dollar exchange rate and Gold price support current development
Platinum experienced a relatively eventful week. After profit taking and smaller selling waves the metal dropped back to 1,000 $/oz. However, this level was defended, catapulting Platinum back again towards 1,050 $/oz. In the wake of Japan’s bank holiday and the respectively thin market, the metal climbed over the mark of 1,060 $/oz. Additional tailwind came - among other reasons - by the weaker dollar and consequently stronger Gold. The path up to 1,081 $/oz is now cleared; support sits at 1,040 $/oz. The ETF net stocks remained unchanged at 2.47 million oz. Demand for platinum sponge continues to be good. The effect of high platinum prices reaches now also the mines, resulting in increasingly better news. Anglo American Platinum for example reported in recent days a 7% increase in production in the first quarter, with its Unki Platinum Mine achieving even a plus of 14%. In contrast, the World Bank describes the current rise in the platinum price in its latest report as not sustainable. The Bank explains its view with the expectation of lower investments and the upcoming round of wage negotiations. On the other hand the World Bank sees robust demand from the automotive sector in the wake of low oil prices.
Palladium on the rise again
Prices above 600 $/oz
Last week started fairly steady with rates around the 600 $/oz level. On Tuesday, Palladium slipped back again towards 590 $/oz which for a moment created the impression, that palladium was unable to defend the 600 $/oz threshold. However, the market showed buying interest, so that on Thursday Palladium took the resistance at 620 $/oz and on Friday morning had risen above 630 $/oz. The next resistance lies at 638 $/oz. There is still very strong demand for Palladium sponge.
Rhodium sees very good physical demand; Ruthenium still sought-after, Iridium with a rather unremarkable week
Rhodium is still the focus of physical consumers and accordingly we see high turnover. Of course, the solid PGM prices with their enormous upward movement in recent days came into play as well. We continue to witness strong interest and would not be surprised to see higher rates over the next few days - provided that the purchases, increasingly coming from the chemical and automotive industry remain at their high level. In Ruthenium, there is still good buying interest and the situation of the recent weeks remains in principle unchanged. The anticipation of a significant price change is in our opinion currently not given. Iridium had a rather unremarkable week behind itself without significant findings.
Due to the upcoming holiday weekends the next edition of "Heraeus Precious Metal Update" will be released on Tuesday, May 17, with a brief summary of the market developments.
We wish you pleasant and relaxing holiday weekends.
Best regards
Your Heraeus Metal Management Team
Volker Skowski, Dipl.-Kfm.
Global Business Unit
Heraeus Metal Management
Heraeus Metals Germany GmbH & Co. KG
Heraeusstrasse 12 - 14
63450 Hanau
Germany
Phone + 49 (0) 6181 / 35 4101
volker.skowski@heraeus.com
www.heraeus-recycling.com and www.heraeus-trading.com