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Commerzbank: Palladium Creeps Closer to Gold Price

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Palladium prices hit a record high Thursday and at one point were within $30 an ounce of gold, Commerzbank says, although the spread has since widened again. Nevertheless, palladium’s recent gains may have been “excessive,” Commerzbank says. “We attribute the price surge – which happened very quickly – to buying on the futures market, as the trading volume yesterday was twice as high as on average in recent months,” Commerzbank says. “In a small, partly illiquid and still very tight market, this buying caused the price to react accordingly. The fact that lease rates are still high reflects the tightness on the market, even though palladium ETFs [exchange-traded funds] have seen hardly any more outflows in the last three weeks. We regard the price rise – palladium has soared by nearly 40% since mid-August – as excessive. Thanks to its strong upsurge yesterday, the palladium price has come to within a good $30 of the gold price for a time, something we would not have believed possible just a few months ago.” The spread has widened back to around $65 early Friday, basis the spot market. In the futures market, December palladium peaked Thursday at $1,161.50 an ounce. Commerzbank analysts comment that clouds over the auto market, which uses palladium for catalysts, “are becoming darker and darker” after weaker car sales in the China and European Union lately, in addition to a decision by the Chinese government against halving the purchase tax for cars. “Given that the Chinese auto market is gasoline-dominated and may well see the first decline in sales for the year as a whole in over 20 years, palladium demand shouldn’t really increase in the next few months,” Commerzbank says.

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

 

Bannockburn: Markets Scaling Back Fed Expectations For 2019

Friday November 16, 2018 08:15

Investor expectations for monetary tightening by the Federal Reserve next year are being scaled back “quietly and without much fanfare,” says Marc Chandler, chief market strategist with Bannockburn global forex. “Over the past week, the implied yield for next June and December [has] eased by around a dozen basis points,” he says. “Roughly half of the decline can be accounted for by shifting expectations for as early as Q1 19. The implied yield of the April contract [has] fallen about seven basis points this week.  Fed Chair [Jerome] Powell's speech this week acknowledged potential headwinds that could emerge next year, but he gave no reason to think the Fed would not hike next month and the early part of next year.” Meanwhile, some market participants are taking note of comments made Thursday by Fed officials Raphael Bostic and Neel Kashkari. Chandler points out that both expressed concern about the slowing of world growth as a reason for the Fed to pause. “Yet these are among the most dovish regional presidents, who have opposed every rate hike or nearly so,” Chandler continues. “The foreign slowdown story is only their latest arguments. And part of the problem with the global slowdown story is that the contraction in the world's third- and fourth-largest economies (Japan and Germany, respectively) were anomalies and both economies appear to have resumed their expansion at the start of Q4.” 

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

 

SP Angel: Gold Gets Safe-Haven Boost From Brexit Uncertainty

Friday November 16, 2018 08:15

Safe-haven assets such as gold are being underpinned by uncertainties surrounding the political situation in the U.K. as the country deals with the Brexit issue, as well as the ongoing U.S.-China trade war, says commodities brokerage SP Angel. “Gold remains on track for the first weekly gain in three as [U.K.] British Prime Minister Theresa May is defying demands to quit as she battles to keep control of her fractious government long enough to deliver a Brexit deal,” SP Angel says. Spot gold was up $2.60 an ounce to $1,215.60 as of 8:05 a.m. EST.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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