Commerzbank say gold could recover in the second half of the week
(Kitco News) - Commerzbank commodities analyst Daniel Briesemann thinks gold could recover in the second half of the week. This is dependent on the speed of the taper and potential rate hikes.
In the report, Briesemann said "amid good US economic data (especially retail sales figures). Gold is under pressure from the firm US dollar and higher bond yields. The Fed meeting that will be taking place tomorrow and the day after is already casting its shadow. The majority of those economists surveyed by the news agency Bloomberg expect the Fed to give some indication of when it might begin so-called tapering, i.e. scaling back its bond purchases, and to decide on this formally at its next meeting in November."
In terms of the bank's view, he said "we also believe that the Fed will signal this week that tapering will be announced in the fourth quarter and begin at the start of the new year. In our opinion, gold is likely to have a hard time making up any ground until the Fed meeting and the subsequent press conference on Wednesday evening. That said, if Fed Chair Powell can convince the market that tapering will not be quickly followed by any rate hikes, gold could recover somewhat in the second half of the week."
Lastly, Briesemann had a look at some of the other precious metals and said "Platinum and palladium have dropped by as much as 3% this morning – platinum is priced at $920 per troy ounce, while palladium is trading at $1,950 per troy ounce. Presumably, they are being additionally dragged down by the weak base metals. It is clear from the CFTC’s latest statistics that speculative financial investors have further retreated from both these precious metals, thereby generating a headwind. Net short positions in platinum were more than doubled to 16,100 contracts in the week to 14 September, while positioning in palladium was net short for the first time since the start of the data series."
Looking at the platinum chart the price looks to be headed to the $1800/oz support area. The price has now dropped a massive 35% from the high of $3017/oz seen in May. The rest of this week will be a big test for the metal as if the price does break through the zone the next support could be much lower down closer to $1500/oz.