The US dollar index has declined 6% since its peak in mid-March.
Why Manufacturers Need to Ditch Purchase Price Variance
This decline gave a boost to commodities and, of course, precious metals were not left behind. However, their upside moves look anything but impressive. Despite the weaker dollar, it seems as if precious metals are having a hard time moving away from their lows.
Gold prices rose a shy 6% since mid-May. The yellow metal is still near record lows. A bit more encouraging is the move silver is making, up 12% since mid-May. The grey metal, however, is still near record lows as well. The metal is trading at $17.71/oz and we’ll see if it can break medium-term resistance at $18.5/oz.
A bit more encouraging is the move silver is making, up 12% since mid-May. The gray metal, however, is still near record lows as well. The metal is trading at $17.71/oz and we’ll see if it can break medium-term resistance at $18.5/oz.
Platinum is up 7%. A very small movement compared to its huge decline since summer last year. The metal has a long way up to reach last year’s levels.
Palladium rose 8% after making a 1-year low in March. Palladium is clearly the best performer among precious metals but since summer of last year is also being dragged down with the rest of precious metals.
What This Means For Metal Buyers
Recent weakness in the dollar is giving a boost to precious metals. However, these price movements have been quite shy so far. It still makes sense to be long-term bullish on the dollar and bearish on precious metals.
For the first time in almost a year, the US dollar index is experiencing some turbulence.
Free Webinar: MetalMiner’s Q2 and Q3 2015 Forecasts
For the past two weeks the index is trading sideways. Still, the long-term trend is clearly up and we doubt this is a major top for the dollar. However, its sharp advance during 2014 certainly leaves the currency vulnerable to some profit-taking.
Weakness in the dollar is giving support to commodity prices. After a steep decline during the second half of 2014, commodities are now stabilizing. A weaker dollar during the past few months also explains recent upturns in stock markets tied to commodities such as Russia, Canada and Brazil.
Further weakness in the dollar throughout the rest of the year would give a bigger boost to commodities and these foreign markets.
Metals Still Bearish
Industrial metals haven’t really received a boost during the last few months. Although some base metals rose we also saw others recently fall to record lows. Worth mentioning, however, is oil prices climbing to their highest levels this year ($58 a barrel).