Global Precious Metals Status Quo Brings Prices Back to Earth

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The Global Precious Metals MMI® fell to a value of 86 in March, succumbing to the across-the-board decline that has affected commodities this year. It was a decrease of 4.4% from 90 in February, a month in which gold and silver saw a sharp spike as a hedge against weaker currencies.

Global-Precious-Metals_Chart_March-2015_FNL

In February, gold and silver came back down to Earth and the precious metals status quo was maintained.

Fed Inaction Means No Action for Prices

The strong dollar and the resolution of Greece’s latest bailout talks have not helped the investment metals and gold, particularly, lost some of its value as a result this month. Palladium is still in high demand for industrial and automotive uses but, unlike last month, it could not overcome the losses felt by its fellow PGMs.

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The Federal Reserve is widely expected to raise interest rates in the second half of the year, but recent comments by Fed Chairwoman Janet Yellen seem to have soothed the fears of investors who believed such a move could come as early as June. Yellen said the Fed would proceed cautiously during minutes recently released from its 2009 open committee meetings.

The Fed will meet again this month, but most don’t believe any change in interest rates will happen earlier than the fourth quarter based on the meeting minutes.

International Deals Limit Legal Buying

Greece reached a deal with its creditors and will remain in the European Union, quelling fears of unrest and further devaluation of the Euro. The deal, agreed to by euro zone finance ministers, will extend debt-laden Greece’s bailout for four months. It’s one of several developments that affected global gold and silver markets. On February 16, as the deal was announced, the LBMA gold price hit a six-week low.

In India, an anticipated lowering of import duties on gold, long clamored-for by the large domestic gold industry there, was not included in the new government budget. An import tax of 10% will remain on all gold coming into the largest democracy in the world. While jewelers and other resellers lamented this move it was music to the ears of India’s burgeoning black market. The black gold market, without any reference to oil, is actually keeping what could be billions in gold transactions off the books and uncounted in the world’s largest consumer of the stuff.

The World Gold Council estimates that 175 metric tons of gold were smuggled into the country last year, spurred by the high customs duty.

Palladium is still in high demand as the low oil prices that are dragging down other commodities are actually helping it in the field of automotive production where it’s used in catalytic converters and exhaust systems. Economic policy here and abroad will likely have to change to give a boost to the investment metals and bring them into line with palladium.

Exact Metal Price Movements: Global Precious MMI®

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At $1,209 per ounce, US gold bullion was down 5.8% for the month. US platinum bar prices dropped by 5.3% this month to $1,172 per ounce. Following a 4.4% decline in price, Japanese gold bullion finished the month at $38.64 per gram. Chinese gold bullion prices fell 4.1% to $39.51 per gram.

A 4.0% decline for US silver left the price at $16.53 per ounce. The price of Chinese platinum bar closed the month at $41.06 per gram after dropping 3.4%. After falling 3.0%, Japanese platinum bar finished the month at $37.69 per gram. The value of Indian gold bullion weakened by 2.8% this month, settling at $439.75 per 10 grams. Last month, Indian silver prices dropped by 1.9% to $615.02 per kilogram. The price of Japanese silver drifted 1.2% lower to $5.32 per 10 grams. Chinese silver fell 1.1% to $574.43 per kilogram.

The price of Japanese palladium bar rose 5.9% to $26.01 per gram after falling the previous month. After dropping the previous month, the price of Chinese palladium bar prices rose 5.7% to $29.40 per gram. The price of US palladium bar rose 4.9% to $807.00 per ounce after falling 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.

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