PRECIOUS METALS

Mon 21 Oct 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: any sterling weakness against the dollar has the effect of bolstering prices in pounds sterling and conversly any sterling strength against the dollar undermines prices in pounds sterling: this occurs because most global trade in precious metal prices is US dollar based.

METAL PRICES: The 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 current concerns supporting the gold price are reported shortages of overnight bank liquidity in the U.S. with the continuing concerns about the US - China trade actions and the US - Iran situation. The gold price is below £1,200 per troy ounce again due to sterling's rise on revising Brexit expectations.

Simple supply of and demand for physical gold is currently of relatively less importance to its price than market sentiment. There is something of a chicken-egg situation as 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, is an important reflector/driver of market sentiment. 

PALLADIUM: the price has reached has reached an all-time high. The major Russian producer Norilsk anounced  they had received their government's approval for them to purchase up to 600,000 ounces of palladium from the Russian Central Bank and hold a substantial stock of the metal .

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, tougher emission legislation. Of more immediate concern could be the introduction of thinner catalysts - it is only the surface that reacts - and also 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 significantly: 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. Other than possible hydrogen cell requirements there look likely to be new applications for platinum utilising the metal in small amounts.