Metals Focus: Platinum Won't Keep Gaining Against Gold
Platinum’s discount against gold has fallen to the lowestlevel since May but may not narrow much further since supply/demandfundamentals are still working against platinum, say analysts with MetalsFocus. At one point this week, the discount was below $370 an ounce. Sub-$800platinum prices in late summer encouraged bargain hunting, Metals Focus says.The metal also benefitted as traders favored so-called risk assets generally,pushing the S&P 500 to record highs and also boosting industrial base metals.“By contrast,the lack of risk aversion has weighed on gold,” Metals Focus says. “This inturn partly explains the recent narrowing of the discount between the twometals. That said, while platinum prices should rise over the short to mediumterm, we do not expect this gap to fall significantly further.” This is mostlydue to platinum’s “largely unsupportivefundamentals,” Metals Focus says. Production is holding up, with meaningfulsupply cuts not expected for a few more years, thus Metals Focus sees 2018 globalmine supply easing by only 2% to 6 million ounces. “A similar decline of 2% ispredicted for global platinum demand,” Metals Focus says. “Here, the twolargest areas are automotive and jewelry, with respective shares of 41% and 28%of fabrication demand in 2018. Both are facing downward pressure.” For autos,the issue is lost market share for diesel-powered vehicles, which requireplatinum for auto catalysts.
By Allen Sykoraof Kitco News; asykora@kitco.com
Commerzbank: Gold Market To Take Cue FromPost-Meeting Fed Comments
Wednesday September 26, 2018 08:35
So will Federal Reserve members remain hawkish, or might theystart to signal a reduced rate of monetary tightening? That, say analysts withCommerzbank, will be the key question for gold traders when a two-day meetingof the U.S. Federal Open Market Committee ends Wednesday. Markets expectanother 25-basis-point rate hike. “The Fed fund futures have priced in two ratehikes this year, including today’s increase, and two next year,” Commerzbanksays. “Some Fed representatives had recently signaled that a somewhat strongerapproach might be taken from 2019. That said, the still stable underlyinginflation pressure, the fact that the impetus from the tax reform will abatenext year and the uncertain consequences of the trade conflict with China dojustify a certain caution. It is thus perfectly possible that [Fed ChairJerome] Powell will put the brakes on rate-hike expectations, which would lend[a] tailwind to gold. This would see gold follow the usual pattern of risingimmediately after a rate hike.”
By Allen SykoraFor Kitco News
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asykora@kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.