PRECIOUS METALS

Fri 02 Aug 2019

IMPORTANT : Please note that MTD and contributors to this page are not financial advisors and the content of this page is not a recommendation to buy, sell or otherwise trade in any way whatsoever, it is simply the writer's personal views on current metal matters.

GENERAL: Current sterling weakness against the dollar has the effect of bolstering prices in pounds sterling as most global trade in precious metal prices is US dollar based.

METAL PRICES: The last London p.m. Fix in pounds sterling are shown along the top of every page of this MTD website if you are viewing on a desktop or laptop or by clicking on contents bars to the right hand side if you are viewing using a phone.

GOLD: The gold price on 7 August 2019 passed US$1,500 per troy ounce.

The back stories on the metal's price increase are concerns about the US - China trade actions and the US-Iran situation. 
The US Federal Reserve having reduced interest rates by 0.25%  - broadly speaking higher interest rates discourage the buying and holding of gold because gold pays no interest.

The World Gold Council reported solid net purchasing of gold by central banks during the second qurter of 2019 although simple supply of and demand for physical gold is currently of relatively less importance to its price than the massive paper/electronic ( ie. futures, options and derivatives) market which might be supposed to be able to facillitate political as well as commercial interests. 

PALLADIUM: prices are still high but currently off this year's very highest levels; short-lived bouts of volatility have occured. 

Whilst palladium is dentistry's most used noble metal it is chiefly utilised for auto catalysts in petrol engined vehicles thus benefitting from the switch away from diesel. Any increase in electrical vehicle usage looks to eventually dent demand subject to the volume of electric vehicle production and, likely not unrelated timing of, emission legislation. Perhaps of more immediate concern would be any overall slowing of vehicle production related to economic situations. Also worth consideration is that the supply of recycled metal is likely to increase encouraged by high prices. 

PLATINUM:  The price has risen recently. Platinum could be substituted for palladium in petrol driven vehicles but the re-jigging of vehicle production to facilitate that change would be expensive and cause a rapid decrease in the two metal's price differential and thus negate some or all of the apparent advantage of such a changeover for the vehicle manufacturers.