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Market Nuggets: UBS Looks For Platinum To Slide Short Term But Lists 3-Month Target Of $1,850

Tuesday February 19, 2013 9:30 AM

UBS looks for platinum prices to correct lower but then move higher toward $1,850 an ounce in three months. “Given that our previous one-month PGM price targets were reached this month, they are now due for an update,” the firm says. “The PGM rally is starting to falter, although the underlying positive story remains intact. The combination of extended market length and potential downside risks to sentiment surrounding the U.S. automatic budget sequestration due in March could weigh on PGM prices in the short term. We therefore scale back our one-month platinum forecast to $1,650 from $1,720 previously. But we keep our one-month palladium target at $720, as this also indicates downside expectations given current price at $760. Three-month forecasts are maintained, at $1,850 for platinum and at $800 for palladium, on the back of expectations that investor interest should resume, and the correction is used as a buying opportunity.” The metals have been underpinned by supply issues and a friendlier risk environment, but net length among futures speculators is already at record highs and could “take its toll” on the metals if sentiment is hurt, UBS says. As of 9:23 a.m. EST, spot platinum was at $1,680 an ounce and palladium at $762.20.

By Allen Sykora of Kitco News; asykora@kitco.com


Market Nuggets: ETF Securities: Recent Decline In Gold Leads To Bargain Hunting

Tuesday February 19, 2013 8:37 AM

Gold's decline to a six-month low last week has precipitated some buying in the form of bargain hunting, says ETF Securities. In particular, the firm cites the record volume on the Shanghai Gold Exchange Monday as market participants returned from Chinese New Year holidays. "The resurgence of risk appetite over the past month has seen a general clearing out of net-long Comex gold speculative positions to August 2012 levels, as investors seem positioned for 'the-worst-is-over' scenarios," ETF Securities says. Investors had been rotating into more cyclical metals, but the fall in gold price has attracted buyers, ETF Securities says. This bargain hunting has enabled gold prices to stabilize around the $1,600 region, the firm adds. "While the technical picture has fueled the liquidation of gold holdings, macro fundamentals suggest a potentially attractive entry level, as global financial markets remain awash with liquidity, global interest rates (are) expected to remain extremely low for the foreseeable future and key macro risks (are) lingering, particularly for the eurozone economy." As of 8:34 a.m. EST, spot gold was up $2.85 to $1,611.90 an ounce and has been as high as $1,615.30.

By Allen Sykora of Kitco News; asykora@kitco.com


Market Nuggets: Traders: South African Mine Violence Underpins Platinum

Tuesday February 19, 2013 8:27 AM

Platinum has been underpinned by a resumption of worries about labor-related supply disruptions in South Africa, traders says. "PGMs stayed well supported following news of clashes between rival labor groups at Amplats' Siphumelele mine in South Africa that injured 12 people," says TD Securities. Platinum jumped $15 as Anglo American Platinum announced the closure of mine shafts following mine violence, says MKS Capital. South African supply issues are always a key focus for the platinum market since three-quarters of the world's primary mine output comes from the country. As of 8:22 a.m. EST, Nymex April platinum was at $1,689.40 an ounce, which was $11.70 higher than the close on Friday ahead of a long U.S. Presidents Day weekend. The contract has traded as high as $1,704.70. Sister metal March palladium was up $11.65 to $764.80.

By Allen Sykora of Kitco News; asykora@kitco.com


Market Nuggets: Traders: Chinese Demand Supportive For Gold; Technical-Chart Concerns Persist

Tuesday February 19, 2013 8:12 AM

Strong Chinese demand for gold emerged as the country returned from Lunar New Year holidays after the metal’s recent sell-off, although otherwise the technical picture has been hurt, traders say. The metal briefly fell through $1,600 an ounce for the first time in six months Friday. “Sentiment towards gold still remains extremely fragile in the short-med term, but one positive development yesterday was that SGE (Shanghai Gold Exchange) volume hit an all-time high of nearly 22 (metric) tons traded intra-day,” says Alex Thorndike, senior trader for precious metals and foreign exchange with MKS Capital. “This was not totally unexpected, however, considering XAU prices had fallen $70 since Chinese participants last saw the market and that they have made up the lion’s share of physical demand this year.” TD Securities adds: “We believe the Asia/Pacific time zone will become increasingly important in setting price direction as the Chinese exchanges expand their global influence.” Still, technical-chart weakness persists, says Thorndike. “The close below $1,625-27 support was a major bearish development and any upside will be viewed as corrective to unwind the overextended downside conditions.” TDS points out that the 50-day moving average in gold is moving lower toward the 200-day. The last time the 50-day fell below was last April and a large price retreat followed, TDS says.

By Allen Sykora of Kitco News; asykora@kitco.com


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