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Aberdeen's Gold Suggests 'Caution On Palladium'

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Maxwell Gold Gold, director of investment strategy at Aberdeen Standard Investments, offers some caution about the high-flying palladium market that has traded above $1,600 an ounce for the first time ever each of the last two days. The most recent surge was helped by reports of a Russian export ban on precious metals, but this would be for scrap only and temporary, Gold points out. Further, he notes, Russia does not even provide a “material amount” of palladium scrap to the market. “Palladium prices continue to reach record highs and broke through $1,600/oz this week; however, I would suggest applying caution on palladium in the short term,” he says. “The price is currently at the upper range of a bullish scenario of $1500-1600/oz by year-end. The market remains in supply deficit but isn’t as tight of an imbalance as it was at the start of the year.” This is reflected by borrowing rates for palladium, which have fallen from over 30% in January to about 4.5% currently, he says. “The large amount of buying forward and inventory building over the last few months may have slowed, causing a drop in these lease rates,” Gold says. As of 9:45 a.m. EDT, spot palladium was $7.15 higher for the day to $1,595.55 an ounce, up 92% from the mid-August low of $832.45.

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

 

Metals Focus: Platinum May Rise With Gold; Palladium To Remain Strong

Wednesday March 20, 2019 09:15

Metals Focus looks for platinum to rise into year-end largely on the coattails of gold, but says platinum won’t catch up with high-flying sister metal palladium any time soon. Palladium hit successive record highs just above $1,600 an ounce Tuesday and Wednesday, while platinum also firmed. Both metals are used in automotive catalysts. “The contrast with the platinum price could not be sharper,” says Metals Focus, noting late Tuesday that while platinum has ticked higher by some 9% since August, the metal was at a 14-year low back then. Meanwhile, palladium has nearly doubled from the August low. “In our view, the explanation both of a record high palladium price and the underperforming platinum price reflects the contrasting dynamics of each metal’s underlying supply and demand,” Metals Focus says. The palladium market had a supply-demand deficit of 993,000 ounces last year, and the consultancy looks for a deficit of 789,000 this year. “In our view, palladium enjoys the strongest fundamentals across the major precious metals and therefore the ongoing stock decline underpins the strength in the palladium price,” Metals Focus says. Meanwhile, Metals Focus looks for a 2019 surplus of 650,000 ounces for platinum. “With regards to the 2019 price outlook, we therefore expect palladium to generate further upside, surpassing $1,700 before year-end,” Metals Focus says. While platinum may “struggle with unsupportive fundamentals,” the firm does look for improvement in prices along with gold. “We expect gold to eventually reach $1,400, but the upside will be concentrated towards year-end,” Metals Focus says. “This in turn should help deliver firmer platinum prices, which could touch $1,000 towards end-year. However, two points are worth noting. First, we expect platinum’s discount to gold to remain above $400 this year. Second, we believe that palladium’s stronger fundamentals will see it continue to trade at a substantial premium to platinum at around current levels.”

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

 

Commerzbank: Central Banks Still Buying Gold For Reserves

Wednesday March 20, 2019 09:15

Central banks will remain noted gold buyers in 2019, Commerzbank says. The World Gold Council has previously reported that official-sector buying in 2018 was the most in roughly half a century. Commerzbank analysts cite the latest data from the International Monetary Fund showing that a number of central banks were in the market again in February. “Among them were the usual suspects like Kazakhstan, but also countries that rarely buy gold, such as Colombia and Qatar,” Commerzbank says. “The IMF figures show that India already topped up its gold holdings in January. After last year saw central banks buying large quantities of gold, they are also likely to account for a significant proportion of gold demand this year.”

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

 

RBC’s Gero: Gold Market Cautiously Awaits FOMC Outcome

Wednesday March 20, 2019 09:15

Gold traders are on “cautious Fed watch” early Wednesday, awaiting a statement and news conference at the end of a two-day meeting of the Federal Open Market Committee, says George Gero, managing director with RBC Wealth Management. Still, he adds, the metal is holding support around the $1,300-an-ounce area. As of 8:52 a.m. EDT, Comex April gold was 70 cents higher at $1,307.20 an ounce.

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

 

Commerzbank: Platinum’s Technical-Chart Picture Improves

Wednesday March 20, 2019 09:15

Platinum has shown sparks of life, climbing by 1.9% Tuesday and trading higher again so far Wednesday. As of 9:02 a.m. EDT, the metal was up $3 to $854 an ounce. “It appears to have been boosted by palladium’s recent price surge,” Commerzbank says. “However, the technical picture has also brightened of late after the important 100- and 200-day moving averages held firm. What is more, yesterday saw a very large inflow of nearly 40,000 ounces into platinum ETFs [exchange-traded-funds]. Certainly platinum had catch-up potential, especially vis-à-vis palladium – and still does.”

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

 

CME Group Reports Record Open interest In Copper Options

Wednesday March 20, 2019 09:15

CME Group says open interest in Comex copper options hit a record 62,220 contracts on Monday, topping the previous record of 56,674 set on Feb. 22. Open interest refers to the number of positions that are open at the end of the business day. Aggregate call option open interest for Comex copper reached a record 44,571 contracts, surpassing the old peak of 35,515 contracts, also set Feb. 22. Since the start of the year, Comex copper options have set 13 daily open interest records, including 12 consecutive record days in February, the exchange operator reports.

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