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Palladium Back Below Gold; Commerzbank Sees 'Correction Potential'

Kitco News

Palladium prices have corrected sharply lower and given up their premium to gold. As of 8:44 a.m. EST, spot metal was down $17.40 to $1,221.80 an ounce, while gold was up 40 cents to $1,237.45. On Wednesday, palladium – boosted for some time now by strong demand for automotive catalysts – traded above gold for the first time since 2002. Palladium hit a record high of near $1,260, before tumbling sharply Thursday, reports Commerzbank. “In our opinion, the palladium market is much distorted at present; the spot price is some $30 higher than the price of the front-month futures contract (December),” the bank says. “What is more, short-term lease rates have surged to 25-30%. Like the falling forward curve, this is indicative of a tight market. Palladium ETFs [exchange-traded funds] registered outflows of 6,400 ounces yesterday – this is presumably related to the leasing transactions. In our view, the palladium price is too high despite the currently tight market, and we now see considerable correction potential.”

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

 

TDS: Gold Reacting To Increased Trade Tensions, Softer Stocks

Thursday December 06, 2018 09:05

Gold is facing conflicting signals – increased trade tensions could help the U.S. dollar, which hurts gold, but the metal could be underpinned by signs of another sell-off in the stock market, says TD Securities. A Chinese business executive was arrested in Canada and faces extradition to the U.S., potentially inflaming trade relations between the U.S. and Canada again, according to news reports. “Recent strength in precious metals, due to a weaker U.S. dollar in combination with a stronger Chinese currency, could be unwound as trade tensions spark again — but weakness in equities and a flat yield curve should add support to the complex,” says TDS. “We do not expect trend follower[s] to significantly shift positioning, with prices above the $1200/oz level for gold, but silver is in range for additional CTA [Commodity Trading Adviser] selling near $14.30/oz.” As of 8:48 a.m. EST, spot gold was up 25 cents to $1,237.30 an ounce.

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

 

Bannockburn: U.S. Treasury Yields Fall Amid Risk-Off Sentiment

Thursday December 06, 2018 09:05

Risk-off sentiment is occurring in financial markets again, with the yield on U.S. Treasury notes falling, says Bannockburn Global Forex, LLCThe global capital markets were fragile amid trade uncertainty and economic slowdown fears,” says Marc Chandler, chief market strategist. “News that Canada arrested the CFO [chief financial officer] of Huawei on behalf of the U.S., ostensibly for violating the embargo against Iran, triggered an almost immediate risk-off wave that has extended the equity-markets losses, sending core bond yields lower, with the U.S. 10-year slipping below 2.9%, and underpinning the dollar against most currencies, with the notable exception of the Japanese yen and Swiss franc.”

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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