Dealing Desk: Uncertainty Underpins Strong Gold PerformanceAug 4, 2017·Rachel Stonier
Goldmoney clients have been net selling all precious metals this week, with gold and silver being the most actively traded. Clients have preferred vaults in Zurich, London, Singapore, and Hong Kong, and have shown less preference for the New York, Ottawa, and Toronto vaults.
A combination of weak economic and inflation figures from the U.S.; cautious initial Brexit talks; geopolitical uncertainty surrounding the U.S., Russia, and global conflict areas; and the ballistic missile launched by North Korea have all underpinned gold’s performance. Safe haven buying, continually low interest rates, and a weaker U.S. dollar have boosted the metal’s price. Failed U.S.-China trade talks and uncertainty surrounding healthcare reform saw the U.S. dollar come under pressure, which benefited both gold and silver.
Gold started the fortnight at $1,248 and stayed range-bound at that level until the Fed announced it decided to leave rates unchanged, which pushed the metal to $1,261. Although the Fed did not provide a timeline for unwinding its balance sheet, the market anticipates they will reduce $4.5 trillion in government and mortgage debt as early as September. Gold recently continued upward to reach a seven-week high of $1,274.
Silver saw a three-week high of $16.45 ahead of the Fed’s decision, but subdued demand from jewelers and industry retailers kept it on a sideways path. The metal moved to a five-week high of $16.80 following the Fed’s announcement then experienced a supposed ‘fat finger’ in Asian trading hours and hit above $16.90, which made market participants cautious.
The South African Reserve Bank cut their interest rates by 25 bps in a surprise move, which bolstered platinum prices in the South African Rand and pushed the metal to a five-week high of $929. Zimbabwe filed a court application to enforce a previous notice to seize more than half of platinum producer Zimplat’s mining land, while the white metal is currently enjoying a run above $960.
After starting the period rather subdued at $837, palladium has recorded a new yearly high above $900. The metal has gained more than 30% since the start of 2017 and has been the top performing precious metal. Demand for the metal has been bolstered by the Chinese automotive market, with 2.2 million cars being sold in June – a year-over-year increase of 3.8%.
All precious metals were up over the past two weeks: Palladium saw the biggest rise of 4.9%, platinum gained 4.0%, silver rose by 2.1%, and gold increased by 1.9%.
03/08/2017 16:00 – Gold: $1,268.97; Silver: $16.69; Platinum: $962.03; Palladium: $892.62 Gold/Silver Ratio: 76.02
NOTES TO EDITOR
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