Heraeus NY Market Report

GOLD

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.

SILVER

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.

PLATINUM

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.

Platinum and Palladium Supply Shortage

Heraeus Market Report

Very bullish news yesterday from the release of research by Johnson Matthey which indicates shortfall across all the platinum group metals. They are looking for shortfall of supply for platinum of roughly 1.13mm and in palladium 1.62mm ounces. Of course investment money is looked upon as demand and others view it also as above ground stocks which in platinum ETF holds roughly 2.67mm and palladium 2.98mm ounces of metal. Still this is bullish news for these white metals as auto sector demand continues to grow. Interestingly, Rhodium they also expect to end in deficit this year by 548k ounces against rising auto demand and meanwhile the ETP only holds a little more than 17k in metal. A very bullish signal for this white metal. Today Pt and Pd are holding their ground against the very good GDP report out of the USA this morning at 3.9% higher than expectations by .7%. Initially gold and silver came off on the bullish news for the US dollar and US investments but have since recovered some ground from the initial knee jerk reaction. The continued resilience of gold and silver against bearish news has surprised many traders. Good buying whether short covering or new longs from bargain hunters are slowly building a strong base for the metals. Expect the rest of the day to be quiet and tomorrow’s Durable Goods Orders release will be the last event of note before the Thanksgiving day holiday this week.

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Weekly Precious Metals Report

Heraeus Weekly Report

GOLD

Gold could hold the price gains of the previous week and has not only been defending support at 1,180 $/oz successfully but also closed marginally above the 1,200 $/oz mark.  The metal thus recorded a weekly gain of 1%. After significantly increased gold imports in Q3 to India there are new discussions on regulatory measures like an increase of import duties. The latter is currently discussed by the Indian Central bank and the government for the purpose of compensation of the trade balance and an adjustment is expected shortly so that demand from India will suffer. Support was seen through central bank purchases: as for example the Russian Central bank explained last week that Gold makes up 10% of their reserves and that this year so far 150 tons have already been purchased. The Dutch central bank in turn got itself much talked about after pulling back gold from the US and returning it to Amsterdam.  (Read more...)

Heraeus Weekly Report

GOLD

Last week was again a friendly week for gold and the metal gained 1.2% during the course of the week – its best performance for a month. The resistance at 1,320 $/oz could however not be sustainably broken. This morning we are slightly up, trading at 1.327 $/oz.

The tension between the USA and Russia due to the Crimean crisis had already driven gold in March to a six month high edging round the 1,400 $/oz mark and it again gave support to the metal last week. Conjectural remarks by US Secretary of State John Kerry about the potential Russian military action in Ukraine led to safe haven demand. The publication of the last FED meeting minutes (FOMC) gave more substance to gold’s case. Apparently the FED’s position on an interest-rate increase and the end of the Quantitative Easing programme, after all, appears to be slower than was assumed in previous weeks. The drivers that have been behind gold for many years thus again gained more influence. As a consequence of this assessment the USD lost in strength and the suffering of the equity markets became an advantage for gold. Missing flows into ETFs however fundamentally point towards an absence of investor interest.  Read more...

Heraeus Market Report

GOLD
Positive US data sent gold into a tailspin last week (low at 1,212 $/oz). US monthly production figures were the best in 2 ½ years this November which again brought with them the question of the timing of the reduction in the US bond-buying programme (currently $ 85 bn / month). Technical selling did its bit to enhance the slide as funds and investors sold their metal or went short. Gold in euro terms also fell drastically and only at around 891 €/oz did it find some support; a 3 ½ year low. For the first time since 2004 (in €), it looks like gold is going to finish the year with a loss (at the moment ca. -30%). On Thursday losses were quickly recovered (buy-back of short-positions), though the recovery was limited. The outlook for the recovery of the US employment market and the publishing of the non-farm payroll data for November on Friday pulled out support for the metal. Further developments in the Indian gold market remain of importance in the coming year: it is unlikely that the effective import-duty of up to 10% introduced this year is going to be reduced and a trade body official assumes that this will halve demand to around 550-550 tonnes. Illegal imports have already gone up. For example, buying from Thailand doubled in the third quarter and according to assumptions by the World Gold Council, the metal gets smuggled into India from there. We continue to see no reasons that could give sustainable support to gold. With continuing positive data from the US, some market-participants are speculating that tapering could well start this year. Some clarity is hoped for in the coming FED Strategy Meeting of 17/18 December. We expect the present volatility to continue and the 1,200 $/oz mark to be tested; then followed by supports at 1,180 $/oz and 1,150 $/oz.

SILVER

The precious metals markets have an energetic week behind them. Silver lost the most in the complex (-2.36%) as it dropped below 19 $/oz during the course of this reporting period to a 5 month low. Though a short-covering rally on Wednesday saw it recover somewhat, Thursday’s good Q3 US-GDP of 3.6% again put pressure on the price of silver. Additionally the metal got little support from the weak US coin sales. Technically silver is still in an intact downtrend. Resistance is at 20 $/oz with support at 18.90 $/oz and again at the years’ low of 18.20 $/oz. This week, among others, the precious metals markets could be influenced by the following: Inflation data from Germany (Wednesday: 08:00 hours), Industrial production Eurozone (Thursday: 11:00 hours) as well as the US Retail Sales (Thursday: 14:30 hours).

PLATINUM

Driven by high inflows into the NewPlat ETF, platinum ETF’s, as in previous weeks, know only one direction. Despite this platinum had to book mild losses in this reporting period (-0.68%). The metal dropped from 1,362.50 $/oz to 1,353.25 $/oz. After European automobile sales in October and November had recovered, the US-automobile market also reported positive sales figures. These latter were up 8.7% in November; as high as they were 10 years ago. Presently platinum is showing a tendency for falling prices. We expect a sustainable price-rise if and when South Africa is subjected to continuing strikes (see report from 11.11.2013).

PALLADIUM

Year-to-date, palladium remains the precious metal with the best performance (+ 5%). Also during this reporting period it was up slightly (+ 2.60%). On the industrial side, the picture appears to be mildly brighter. An indicator for this is demand for palladium sponge, which has improved slightly. Technically support is at the low of November and December at 705.50 $/oz and resistance at the November high of 762.25 $/oz. Outlook for 2014 as per the prognosis of the analysts questioned by Reuters is an average price of 786.70 $/oz, which implies rising prices. One explanation for expectations of rising prices could be Norilsk Nickel’s – world’s largest nickel and palladium producer – suggestion that the market will have a supply-deficit in the face of stronger demand from the automobile market and an unpredictable “above-ground-stock” situation: “Strong demand from the auto sector and an unpredictable supply from above-ground stocks suggest a physical shortage could take place in the palladium market as early as next year, an executive at the Russia's Norilsk Nickel said on Thursday.”

Heraeus, Nov 7 Commentary

Good Afternoon,

If you are watching CNBC this morning you would think the world revolves around the company Twitter. While the media is focused on the equity markets and the Twitter IPO, traders in the commodity market continue to play the range game. Here is a recap of the news this morning:

1.       Bank of England kept the interest rate at 0.50% and kept their bond purchasing program steady

2.       European Central Bank surprised the markets by cutting interest rate to 0.25% from 0.50% and signaled that they will keep interest rates low for as long as necessary   

3.       US weekly initial jobless claims at 336k and continuing claims at 2868k

4.       US GDP grew at 2.8% in the 3^rd quarter faster than most estimates

5.       US personal consumption grew at 1.5%, less than expected

6.       GDP price index increased at 1.9%, more than expected

ECB is focused on not letting the European economies slip back into recession and pump maximum liquidity into the markets. Lack of inflation and stubbornly high unemployment rates are causing concerns. US economy grew at a faster pace in the 3^rd quarter due to increase in inventory levels but there are underlying signs of weakness from business to consumer spending. Economic and political uncertainty in the US have been affecting business and consumers alike. US job markets are showing signs of life but the real unemployment rate and the quality of the jobs being created are both being debated. After all these data, we are right back at where we started… waiting for more “convincing” data to point us to the direction of the US and global economies and further central bank actions. Precious metals continue to trade in a range, gold $1300-$1325, silver $21-$22, platinum $1425-$1475, and palladium $725-$765. Any attempts to break these ranges have so far been met with stiff counter moves. We anticipate gold and silver to trade slightly lower on continuing debate over US FED bond purchase tapering. Platinum and palladium will move depending on next sets of economic data out of China and Europe with South African mine strike news in the background. We believe traders will continue to trade the ranges and jump heavily into a position once data becomes clearer. 

Thanks,     

David M. Lee

Heraeus Metals New York LLC

Gold Market Commentary

Good Morning,

The precious complex is under heavy pressure this morning despite a weaker greenback and tension at the world’s #1 platinum producer that just added another layer of complexity. At midnight the U.S. government entered into partial shutdown as the plug was pulled non-essential services due to the congressional stalemate over a continuing resolution to fund the largest employer in the country and the Affordable Care Act. In South Africa, the National Union of Mineworkers (NUM) is heading to court to contest Anglo American Platinum’s planned restructuring that includes eliminating 3,300 jobs. The Association of Mineworkers and Construction Union (AMCU) has been on the picket line since last Friday and will continue the strike action as recent negations have failed to resolve the situation. On the U.S. economic front, data on construction spending and manufacturing  are on tap for today as well as September U.S. auto sales figures. Ford sales were up 5.8% last month compared to estimates of 5.0%. Gold closed Monday’s session at $1327 but has since fallen below the $1300 mark and is down nearly 2.5% to $1295. Platinum is down more than 2% to $1387 after closing the previous session at $1408. Have a great day!

Tom Hungerford

Sales and Marketing Representative

Heraeus Metals New York LLC

Heraeus Market Commentary

Good Morning,

We could be in for a rather uneventful day in the precious metals complex as market participants await the conclusion of the FOMC meeting tomorrow. At this point, it seems the consensus isn’t if the Fed will begin tapering the $85 billion-a-month asset purchase program but by how much. A $10 billion reduction in the program may have already been priced into the market so any deviation could make Wednesday afternoon very interesting. Until then it’s a wait and see atmosphere as the metals hover at or slightly below yesterday’s closing levels. Gold closed the previous session at $1317.80 and touched as low as $1307 in overnight trading. The yellow metal now trades $1312.60.  Silver ended Monday’s session at $22.009 and now trades nearly .75% lower at $21.850 after reaching as high as $22.14 overnight. Platinum trades about .5% lower at $1434 while palladium trades relatively flat to yesterday’s close and continues to hold above the $700 mark at $705. In economic news, The Labor Department released its consumer price index which rose .1% last month compared to a .2% increase in July. Have a great day!

Tom Hungerford

Heraeus Metals New York LLC

Heraeus Market Commentary

Good Morning,

After yesterday’s blood-letting in the precious complex, it’s looking like a quiet Thursday ahead of tomorrow’s highly anticipated U.S. government jobs data. ADP private sector jobs numbers, released earlier this morning, showed 176,000 added to private payrolls and weekly jobless claims numbers fell by 9,000 last week. However, there was little reaction to the data and the metals continue to hover near yesterday’s closing levels with a little pressure building to the downside. That is, except for and palladium which continue to get no love from positive U.S. auto sales figures released throughout Wednesday’s session. Palladium has fallen another 1.5% to $687.90 after closing yesterday at $698.25. Gold is a bit lower from Wednesdays close with prospects of a full blown war in the middle east dissipating as the Obama administration continues to emphasize the limited nature of any strike against Syrian targets. The yellow metal closed the previous session at $1390 and now trades roughly $10 lower to start the day. Platinum failed to hold the $1500 level yesterday but the potential for a spill-over of labor tensions in the South African gold sector, into the platinum sector, should cushion the white metals retreat. Have a great day!

Tom Hungerford

Heraeus Metals New York LLC

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