Correction: This article has been updated to reflect a revised Global Precious Metals MMI index value due to a formula error. We apologize for any inconvenience this may have caused.
Well, after a rather volatile year, the monthly Global Precious Metals MMI® ended 2012 by falling slightly from 111 to 110, still fully ten points above the January 2012 baseline value of 100.
So where will that take us into 2013?
From a technical perspective, we defer to Reuters’ market analyst for commodities and energy technicals, Wang Tao, who stated in a recent report that a stronger dollar will take the shine off of precious metals in early 2013. Tao expects to see spot gold drop into a range of $1,397-$1,447 per ounce over the next three months, “as indicated by its wave pattern and a Fibonacci retracement analysis.” (Silver prices are also set to drop, he says.)
We’re not as fancy as Fibonacci, but from our perspective, we would suggest buyers and investors look no further than the debt uncertainty that still remains at the core of US federal legislation. The “kick the can down the road” approach regarding US fiscal and monetary policy may force speculators to push prices higher.
Over the past month, however, the trends for US gold and silver transactional prices looked to reflect Tao’s outlook.
Price Drivers of Precious Metals Index Rise
Mainly, the price of Chinese gold bullion drove the rise by finishing the month 2.8 percent higher.
To a lesser degree of impact, the price of Japanese palladium bar rose 6.7 percent over the past month. For the second month in a row, the price of US palladium bar increased, rising 3.2 percent. Japanese gold bullion finished the month up 1.7 percent per gram. Chinese palladium bar saw its price rise 1.5 percent.
Tempering the index rise were US silver and gold prices. After rising 5.7 percent the previous month, US silver prices dropped 9.1 percent. The price of US gold bullion dropped 3 percent after staying flat the previous month.
The Global Precious Metals MMI® collects and weights 14 global precious metal price points to provide a unique view into precious metal price trends over a 30-day period. For more information on the Global Precious Metals MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.