Gold price firm trading around record highs

Tue 30 Jan 2024

Palladium price is soft

GOLD: Trading volumes of London physical gold are dwarfed by trading in US gold derivatives (futures, options, swaps), and this makes the price susceptible to manipulation, as does press reporting. Central banks bought a lot of gold during 2023 to lend backing to their self-issued fiat paper currencies. Still, as central bankers tend to be clever, sophisticated traders whilst they may have, in a sense, underwritten the market, I don't see their actions as having much contributed to current prices.

The main factors have been war fears and political/economic uncertainties. However, if military push comes to military shove, there's likely to be a movement into US dollars, which will buy food with a then-current adverse effect on the price of gold.

PALLADIUM: the platinum group metal is mainly used in the catalytic converters of diesel engine exhausts, and as consumers have orientated to petrol and electric vehicles, demand has reduced; the price has nearly halved.

PLATINUM: Surpluses of this metal look to be replaced by shortfalls, and using hydrogen-fuelled vehicles is a distant glint of sunshine for speculators in this metal.