Monday, February 23, 2015

Heraeus NY Market Report

For a fourth week in succession Gold had to put up with losses and fell to a 6-week Low at a price of 1,197 $/oz. The results of the FED meeting in January showed that the US is more hesitant than expected with regard to an interest increase. While this put pressure on the USD interest-free Gold benefitted in this environment. Due to the tension between Greece and the EU Gold received further support. The metal shone within the context of the difficult discussions and the respective possibility of a Grexit as a currency of crisis.  The agreement of the finance ministers to extend financial aid for Greece for another four months has relaxed the matters for the time being and put pressure on the Eurogold after an increase to 1,075 €/oz. It fell by 20 €/oz to 1,053 €/oz. It is expected that this has not been the last word. In the long term Gold will benefit from the decision of the Reserve Bank of India to loosen up import as well as lease agreements. The top trading companies are now allowed to import metals without the final application having to be pre-determined. The Indian trade balance however remains the guide for such relaxations or tightenings. Beginning the middle of the week China returns to the market after new year’s celebrations bringing back some purchasing power. Up until now the threshold of 1,200 $/oz has been defended and continues to be the first support, followed by 1,170 $/oz. Janet Yellen’s speech in front of the Senate Banking Committee will be informative with regard to the US economy. We see very good demand for small bars as well as increased output of refined Gold.

After a strong beginning of the year Silver has been moving in a downward trend since middle of January. Thus the last week was also disappointing with a performance of -6.3%. The support from the trend-channel results at 15.80 $/oz. ETF investors in turn use the low price levels for entries so that stocks are back on annual highs. The FOMC minutes have been perceived rather in a surprised manner as the interest increase seems to be occurring later than expected and which in turn has disinflationary risks.  As the market however does not really expect an interest increase in the middle of the year (June/July) the effect on metal prices as well as currencies was rather limited. As the issues around Greece have again been postponed to a later date it is exactly those interest expectations and US government bond yields which will primarily determine the Silver and the Gold price within the next months. Important data in this week are inter alia from the US like Consumer Confidence on Tuesday as well as Inflation, Jobless Claims and Durable Goods on Thursday. From China we expect the Purchasing Manager Index (PMI) on Wednesday.

Also in the past week Platinum could not recover – on the contrary: the metal continued to lose in value after it opened the reporting period at 1,205 $/oz. At the end of the week the metal only traded at 1,162 $/oz. Right at the beginning of the past week Platinum thus fell to a Low of 1,164 $/oz. It became clear once more that there is a high correlation between the Platinum and Gold price. Thereby Platinum mainly moved in Gold’s rough waters which had been affected by the rather dovish FOMC minutes with a big sell-off. The investment side also looks dimmed currently as investors are reducing their ETF stocks (-0,60 %). Additionally Chinese demand for Platinum has also been decreasing recently. At the Shanghai Gold Exchange an average of around 130 KG per day is seen in volumes which is 30% less than the average daily volumes seen between 2010 and 2014. In favor of Platinum the Automobile industry in turn recorded positive figures again in January. Thus sales figures in January have increased by 6.4% in comparison to the same month a year ago. It is especially countries like France, Germany, Italy, Spain and Great Britain that are recording growth.