Global Precious Metals MMI® Increases, Interest Rate Rise to the Rescue?

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Bolstered by a weaker dollar, global precious metals rose last month as industrial demand for palladium was finally joined by higher gold bullion and platinum prices.

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The number of Americans applying for first-time unemployment benefits inched up by 3,000 to a seasonally adjusted 265,000 in the week ended May 2, the Labor Department said recently. This was less than the 275,000 economists predicted and within reach of the unrevised 262,000 level for the prior week—the lowest since 2000.

Global-Precious-Metals_Chart_May-2015_FNLThis is the latest sign that an interest rate hike may come from the Federal Reserve as continued improvement in the US labor market might clear the path for rate hikes.

How High Will They Go?

Once the Fed starts the cycle of interest rate increases, the market can focus on how high the rates may rise, which will be less of a weight since the expectation is that rates won’t rise very much. Higher interest rates are bearish for gold because they give investors a reason to move money into investment vehicles that produce a yield. Gold has no yield.

End of the Stock Supercycle

There is also rampant speculation that a combination of downward earnings revisions and the difficulty of the banking system to turn bank reserves into money growth will lead to a large correction in the stock market. Precious metals are also a hedge against falling stocks.

The monthly Global Precious Metals MMI® registered a value of 84 in May, an increase of 1.2% from 83 in April.

* Get the complete prices every day on the MetalMiner IndX℠

After dropping the previous month, the price of US palladium bar prices rose 5.9% to $776.00 per ounce. The price of Chinese palladium bar rose 5.5% to $28.05 per gram after falling the previous month. After dropping the previous month, the price of Japanese palladium bar prices rose 5.4% to $25.11 per gram. After a 1.9% increase, Indian gold bullion finished the month at $425.44 per 10 grams. The price of Japanese platinum bar increased 1.8% to $36.84 per gram. Chinese silver prices inched up 1.6% to $576.25 per kilogram. Chinese gold bullion gained 1.3% to finish the month at $38.73 per gram. Chinese platinum bar shifted up 1.2% last month to settle at $39.97 per gram. Finishing the month at $1,184 per ounce, US gold bullion recorded a 0.1% increase.

Japanese silver prices fell 4.5% to $5.19 per 10 grams after rising the previous month. After rising the previous month, US silver prices dropped 3.2% to $16.10 per ounce. Indian silver closed the month at $589.14 per kilogram after dropping 1.1%. The price of Japanese gold bullion drifted 0.4% lower to $38.03 per gram.

US platinum bar held pat last month at $1,142 per ounce.

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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