Articles in Category: Precious Metals

Precious metals like gold, silver, and palladium are fighting back hard against the global trend of dropping metal prices. Last month, MetalMiner reported that the global precious metals index fell 3.77% between June and July. On July 20th, however, gold bullion prices began to rise steadily. Shortly after that, silver bullion prices also started an upward trend.

Last month, the Fed’s interest rate hikes managed to slightly impact rising inflation, though inflation continues to pose significant challenges. This week, the Fed hiked those rates an additional 0.75. Though it’s a little early to know how investors will react, there are several compelling predictions.

For instance, some experts feel investors might start to view gold, silver, and the like as “insurance.” Others predict they’ll treat them as an investment opportunity – a chance to turn currency into something which will gain value down the line.

Precious Metals

Precious Metals: GDP Numbers Not Favorable

After the release of some less-than-savory GDP numbers documenting Q2, precious metal prices rose slightly. As one recent article notes, part of this upward trend came as a result of the Fed’s interest rate hikes. In times of hardship such as recessions, investors often turn to precious metals to get rid of their inflating currency. In their view, precious metals have the opportunity to gain more value in the long run. So, technically speaking, precious metals can serve as a type of “oasis” where investors can escape inflating costs.

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It’s Getting Harder to Predict a Long-Term Trend for Precious Metals

Despite this brief bullish trend, precious metals prices are still dropping along with most other metals. The real question is whether or not precious metals can withstand such intense inflation. Fortunately, many in the investing world are staying hopeful. As previously mentioned, recessions have historically proven invaluable to precious metal investors.

Still, even with this optimism, the upwards trend could prove to be little more than a temporary reaction to yet another Fed interest rate hike. After all, precious metals as a whole have remained in a downtrend since April. Looking at July’s charts, prices seem unable to decide whether they want to take a bullish or bearish path.

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Will Silver Pull Ahead of Gold?

Traditionally, gold has been the pick of the litter in the precious metals market, but silver has been catching up. Of course, silver markets are historically much more volatile than gold. Still, there’s currently a higher global demand for silver due to its growing range of uses. For instance, the precious metal has applications for everything from water filtration systems and solar panels to x-ray films and medical tools. This gives silver an edge over gold in terms of demand.

That said, there’s no evidence that silver will indeed outrun gold in price, even with July’s precious metals bull trend. On Wednesday, the gold-to-silver ratio hit its highest point since 1990. True to color, the US was also facing recession that year.

Gold Bullions

Gold Bullions, Adobe Stock

Ultimately, only time will tell if precious metals will prove to be the safe haven investors are looking for. Of course, there needs to be a storm before we can judge the quality of the shelter. Until a recession is confirmed, all we can do is speculate and hope.

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The Global Precious Metals MMI dropped by nearly 3% this month. Palladium dropped the most, though silver also looked comparatively weak.

Precious Metals

Gold Prices Trends: Bullish or Bearish?

Gold has started to trade within a range formed by swing lows and highs. A break above either range will clear up the overall direction. Without a “big picture” view, the overall direction remains unclear.

Precious metals

According to a recent article, at least three gold analysts have a more bearish opinion of gold for the longer term. The analysts include James Steel, Chief Precious Metals Analyst at HSBC Securities and Suki Cooper, Executive Director of Precious Metals Research Standard Chartered. There’s also Rhona O’Connell, head of Europe and Asian market analysis at StoneX Financial Ltd. Even with an uncertain technical analysis, the group has pointed to a few factors most likely to stop gold’s bull run. The first being a strong dollar. The second is the Fed’s recent belt-tightening.

That said, gold tends to stay strong in both deflationary and stagflationary markets. Rising interest rates signify deflationary actions designed to put the brakes on price increases. However, many remain concerned that the US economy could tip to stagflation. This is a condition typified by slowed economic growth, rising prices, and higher unemployment. Were this to happen, precious metals prices will fluctuate greatly.

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Gold

Silver, by way of comparison, shares the same outlook as gold. However, the price of silver looks weaker with each prior high it takes out. As sell orders are filled, buyer strength gets depleted. Still, silver has room to rise in the short term before it reaches the major supply zone seen on HTFs. HTFs, in this case, stand for “high time frame.” You can see a clear example by looking at the chart on a daily, weekly, and monthly scale.

Meanwhile, platinum and palladium prices are making their own moves.

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Palladium

Precious Metals Prices: Platinum and Palladium

In the case of platinum, prices have begun to shift upwards on shorter time frames. It’s as if they’re targeting newly-introduced supply zones. The introduction of supply basically resulted in newly-formed bearish “order blocks.” Designed to create an inefficiency in price or, this can contribute to stronger moves. Prices begin to correct on a small scale as each weak high gets taken out in anticipation of a “mini-rally” into bearish ranges. That said, from a technical perspective, platinum has a similar outlook to gold and silver.

Platinum

Palladium prices appear weaker overall. Certainly weaker than platinum. The metal’s failure to form any swing highs has caused bias to the downside. Weak lows need sweeping for the trend to resume. In the meantime, short-term rallies will serve as entries for short-sellers as prices continue to form lower highs. Industrial buyers will of course implement a different strategy.

Actual Metal Prices:

  • US palladium prices dropped from $$2254/oz to  $1950/oz.
  • Japanese silver prices dropped from $7.26/ten grams to $6.74/ten grams

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The United Kingdom recently imposed a 35% duty on all platinum and palladium imports from Russia and Belarus. This move is part of a new package of sanctions on the two countries totaling £1.7 billion ($1.7 billion).

The Department for International Trade (DIT) and HM Treasury made the announcement on May 9. Since Russia’s late February invasion of Ukraine, the country has seen dozens of major trade penalties and tariffs. A DIT official told MetalMiner that there were no UK import tariffs at all on those metals previously.

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Platinum and palladium prices have surged along with other precious metals.

A Major Source of Platinum and Palladium

Russia is one of the world’s largest producers of platinum and palladium. Much of this supply comes from two companies: Norilsk Nickel and the Russian Platinum Group.

Reports indicate that Russia supplies about 40% of the world’s palladium and 15.52% of global platinum. The UK alone imported £1.2 billion ($1.47 billion) worth of platinum and palladium from Russia in 2021. The DIT official told MetalMiner this amounted to 14.1 metric tons and 17 metric tons of palladium.

Platinum’s primary application is in catalysis, which is used in automobile catalytic converters. It is also utilized in the production of petroleum and fuel cells. Of course, the hyper-rare element is also a major investment commodity.  Palladium is useful in catalysis as well. It also has applications in dentistry, surgical tools, and jewelry.

According to data from Trading Economics, platinum was priced at around $940 per troy ounce on May 13. On May 11, it reached a high of $994.22.

Understanding the Two Metals

The UK’s import tariff on Russian and Belarusian platinum and palladium is the country’s first action on non-ferrous metals. Meanwhile, on May 5, the HM Treasury’s Office of Financial Sanctions Implementation (OFSI) announced an asset freeze against Evraz. A global metal producer headquartered in London, Evraz has several steel making assets in Russia.

Back in March, the Department for International Trade and HM Treasury imposed a 35% import tariff on iron and steel from Russia and Belarus. This was part of a package stripping both countries of their “Most Favored Nation” status on hundreds of exports. How will these moves affect pricing? There’s no simple answer. However, we can assume that Russian metals companies will feel a significant financial pinch.

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The Automotive MMI (Monthly Metals Index) held flat from April to May. This was largely the result of a number of factors working in concert. Below, we’ll dig deeper into the automotive marketplace to see if we can determine what to expect for the rest of 2022.

Automotive MMI: China Auto Sales, Production Plunge In April

Source: China Association of Automobile Manufacturers

The data resulting from China’s COVID-zero policies continues to look grim. According to the China Association of Automobile Manufacturers, auto sales and production plunged in April. Specifically, the latter index dropped 46.2% month over month, while overall auto sales fell 47.1%

Shockingly, Tesla saw sales throughout mainland China plummet 98% from March. Meanwhile, production for the automaker also took a substantial hit, with Chinese output falling 81% from 55,462 automobiles to 10,757. As lockdowns and other strict policies remain ongoing, experts predict that much of the impact witnessed in April will bleed into May.

There is some good news on the horizon, however. For instance, COVID-19 case counts in Shanghai continue to fall. According to data released on May 11, daily infections managed to drop beneath 1,500 cases, an 18-day low. Meanwhile, around 612,500 people have tested positive for the virus since March 1.

The stark drop in daily infections signals the possibility of an end to lockdowns within the city. However, officials over in Beijing continue to ramp up pressure on the populace. Aside from closing businesses and schools, all residents are now required to work from home.

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Semiconductor Shortage May Not End Until 2024

According to Intel CEO, Pat Gelsinger, the ongoing semiconductor chip shortage will likely persist until at least 2024. This is a tragic prediction considering how much the current shortage is impacting equipment manufacturing.

Gelsinger previously expected the shortage to resolve by 2023. However, in an interview with CNBC’s TechCheck, she revised her estimate, stating, “that’s part of the reason we believe the overall semiconductor shortage will now drift into 2024 from our earlier estimates in 2023. More shortages now hit equipment, and some of those factory ramps will be more challenged.”

So far, the semiconductor shortage has severely impacted global auto production, especially given the slew of other factors at work. In response, AutoForecast Solutions once again lowered its production estimates for 2022.

The company now expects production in North America and the Asia-Pacific region to fall by 2% to 14.82 million and 46.68 million units, respectively. In Europe, Western and Eastern  production estimates now stand at 11.16 million and 6.26 million.

UK Imposes 35% Duty on Russian Palladium, Platinum

Both palladium and platinum prices saw a modest lift following the UK government’s announcement of a new round of sanctions on Russia and Belarus. As part of the package, the UK will raise tariffs on products including platinum and palladium by 35%.

Russia produces around 40% of global mined palladium and almost 16% of global platinum. This makes the country the world’s largest and second-largest producer with respect to both precious metals. As such, the ongoing war in Ukraine and its effects stand as a leading driver for most of this year’s price fluctuations.

Indeed, both metals previously jumped in early April following a decision by the London Platinum and Palladium Market to suspend two major Russian-government-owned refiners.

MetalMiner’s free weekly newsletter provides up-to-date metal price intelligence on the impact of the war in Ukraine on metal prices and the Automotive MMI.

Actual metals prices and trends

  • The US scrap steel price rose 1% month over month to $606 per short ton as of May 1. Meanwhile, the US HDG price picked up by 2.36% to $1,906 per short ton.
  • US palladium bars rose 2.32% to $2,254 per ounce month over month. Platinum fell 5.25% to $938 per ounce.
  • The Korean 5052 coil premium over 1050 declined 4.83% to $4.53 per kilogram.

 

 

The Global Precious Monthly Metals Index (MMI) fell by 0.9% for this month’s index reading, largely due to falling silver prices.

Precious metals prices

Did you know that MetalMiner forecasts for several precious metals in the MetalMiner Insights platform?

Rising interest rates tend to dampen investor sentiment toward precious metals. Gold and silver typically act as a store of value, particularly during periods of high inflation. Therefore, the Fed’s half-point interest rate increase can largely be blamed for recent price weakness. In essence, the market has priced in the policies deployed by the Fed.

During times of uncertainty, gold and silver are considered safe-haven assets. In this case, the ongoing conflict in Ukraine, stubbornly high inflation, and the VIX (volatility index) are providing tailwinds for precious metals. Silver, on the other hand, has not seen the same highs. This is precisely why many experts are claiming that it’s time has come.

Silver prices

Source: MetalMiner Insights

However, from a technical analysis perspective, prices have begun to break down. Indeed, the macro trend has already turned to the downside, while price action shows signs of a market structure shifting downward on daily/weekly time frames. Moreover, support levels and price floors have yet to be established. As you can see, this has left silver to plummet through prior lows and take out any retail support.

Silver price chart

Gold Prices Look Similar to Silver

The precious metals MMI also shows that gold prices have continued their downward trend as well. This is mostly due to a recent shift in market structure beginning in late April. As prior lows continue to show weakness, price action suggests gold will look for stronger support levels. We suggest these will range between $1780-$1820/troy ounce, as indicated in the graph.

Gold Price Chart

Platinum Also Saw Price Declines

Platinum prices declined by over 5% percent month over month. Of course, platinum’s number one end-use application remains auto exhaust systems. And while global automakers show some month-over-month growth, production remains well below pre-pandemic production levels.

As always, buyers should familiarize themselves with the five best metal sourcing practices

In Other News: The Dollar Gains Strength

The US dollar continued its recent ascent, moving from 98.63 to over 103. Typically, a strong dollar equates to lower commodity prices. Interestingly enough, the CRB index appears to have held onto its gains while shifting into a short-term sideways pattern. Although April’s CPI finally dropped (to 8.3%), the decline was merely a result of drops in energy prices. The remaining core index has yet to find a floor. Still, according to the WSJ, the core price index increased by .6% after March’s .3% gain.

 Actual Metals Prices And Trends

  • The biggest movers included Japanese silver, which fell 9.8% to $7.26 per ten grams. Meanwhile, US silver fell 8.47% to $22.74/oz, and Japanese platinum fell by 8.35% to $29.17/gram.
  • The only upward movement came from US palladium bars which increased by 2.32% to $2254/ounce. However, it’s worth noting that those prices have since slipped.

 

The Global Precious Monthly Metals Index (MMI) fell by 1.4% for this month’s index reading, as gold prices retraced after peaking in early March.

The MetalMiner Insights platform features a full suite of precious metals prices. 

Gold, silver prices retrace

After peaking in early March, gold prices have retraced.

The U.S. gold bullion price jumped to nearly $2,040 per ounce March 8, nearly two weeks after Russia began its invasion of Ukraine.

As we noted last month, COMEX announced it would suspend six Russian gold and silver producers.

“Russia is a significant gold producer but still in single-digit percentages globally,” MetalMiner’s Stuart Burns explained last month. “Much more significant is palladium, where they produce 40% of global supply, and platinum, which is less but still very significant. The implications for the catalyst markets are real.”

Since the March peak, prices retraced down to around $1,920 per ounce early this week.

Meanwhile, silver prices peaked at $26.40 per ounce in March. Since then, they retraced down to $24.54 per ounce earlier this week.

Palladium prices also retrace

Elsewhere in the precious metals basket, palladium prices have also come back down after surging earlier in March.

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After registering a record high earlier this month, palladium prices dropped about 17% early last week. Palladium prices had a sharp correction, as worries over shortage in its supply from major producer Russia came down several notches.

Russia accounts for 40% of global palladium mine production.

palladium bars

Piotr Pawinski/Adobe Stock

Palladium is a crucial component in automobile catalysts. Russia is the top producer in the world, followed closely by South Africa.

The MetalMiner Monthly Metal Index (MMI) report includes additional analysis of palladium and other precious metals. 

Palladium prices surge after invasion

For the past few weeks, palladium prices surged dramatically following Russia’s invasion of Ukraine.

But early last week, gold and palladium prices slumped after a long rally following some progress in Russia-Ukraine peace talks, reported news agency Reuters.

The MetalMiner team will offer additional analysis of the Russia-Ukraine war and its impact on metal markets during its next webinar, scheduled for Wednesday, March 30. Make sure to register for the webinar to hear the MetalMiner team’s insights on the conflict. 

Palladium, platinum and rhodium are valuable for their catalytic qualities.

On March 7, 2022, palladium prices touched an all-time high. The spike came amid concerns that sanctions would disrupt exports from Russia following its invasion of Ukraine.

Spot palladium had gone up to U.S. $3,442.47 an ounce, surpassing a previous record set in May 2021. This year itself has seen palladium prices rise by 76%.

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The Global Precious Monthly Metals Index (MMI) rose by 2.9% for this month’s value, as gold prices picked up amid the ongoing Russia-Ukraine war.

The March 2022 MMI report, featuring all 10 MMI indexes, will be available for download later today. 

Gold prices rise

February proved a difficult month for stocks, as the S&P 500 fell over 5% and the Dow Jones Industrial Average fell 6%.

In times of volatility, investors often flock to safe-haven assets, including gold. On top of historic levels of inflation — at 7.9%, the highest in over 40 years — the Russian invasion of Ukraine introduced another jolt of volatility to markets.

The U.S. gold price opened February at just over $1,800 per ounce before rising through the rest of the month.

Gold prices have continued to surge in March. The price reached $1,980 per ounce to close last week, marking an 8.39% month-over-month rise.

U.S. gold price chart

U.S. gold prices. Source: MetalMiner Insights

COMEX suspends Russian producers

However, on March 7, COMEX announced it would suspend the “approved status for warranting and delivery” for several Russian gold and silver companies, including:

Read more

Editor’s note: Join the MetalMiner analyst team on Wednesday, March 2 from 11:00-11:30am market outlook for aluminum and carbon steel. The webinar will also discuss the Russian invasion of Ukraine and impact on global metals markets

So, after weeks of will he, won’t he, Russian President Vladimir Putin finally ordered troops into two regions of eastern Ukraine. After recognizing Luhansk and Donetsk as independent states earlier this week, Putin made an emotional and rambling televised address to the Russian people. Where this will lead no one knows. But it seems unlikely he will limit his actions now.

As expected, the West has done relatively little apart from huff and puff. Germany said it will not certify the Nord Stream 2 pipeline from Russia. This action caught nobody by surprise.

Metal prices increase

Prices of key metals have surged in recent weeks, turbo charged above previous gains earned on the back of power shortages, energy costs and Chinese environmental restrictions. Aluminium and nickel prices in particular, have reached multi year highs on fears sanctions will result in a breakdown in supply from Russia. Although Russia maintains a critical role in the supply of those two metals, particularly to the European market, other metals could also fall in short supply.

MetalMiner Insights provides a full suite of European form/alloy/grade prices

According to the US Geological Survey, (USGS) Russia’s Rusal produces about 6% of global primary aluminium, or 3.8m tons last year. Europe’s aluminium market remains tight. It has suffered a shortage of extrusion billets for much of the last year. Since late last year, the Rotterdam physical delivery premium (an expression of metal availability) has become  significant proportion of the semi-finished price. For the first time in LME history, it has broken the premium out as a separate definable cost.

Russian produces aluminum billets, nickel, gold, palladium, cobalt and platinum

At over 7% of global nickel production, Russia serves as major producer with some 193k tons last year. Indonesia and Philippines remain China’s primary suppliers but Russia provides key materials to Europe’s stainless industry. To make matters worse, European companies generally have longer term contracts, not easily replaced at short notice. Russia’s largest producer, Norilsk Nickel, also serves as a major producer of palladium and cobalt. In fact, Russia remains the largest producer in the world of palladium at some 40% of global mine production. Furthermore, Russia serves as the 10% global producer of platinum. Although Russia’s cobalt production provides only  4% of global supply, it [has] served as a viable alternative  to the DRC.  Russia plays an equally key role in the gold market. The country controls about 10% of global mine production only behind Australia and China.

Metal buying organizations can track monthly price movements of precious metals by subscribing to the MetalMiner Precious Metals MMI published monthly to mark price escalation/de-escalation for the metals that fuel green energy

Don’t forget about Russian steel

Russia also produces nearly as much as the US per annum. But unlike the US, at least half of Russian production goes toward export markets, again mainly Europe. Steel supply does not face the same constraints as base metals. However, while European mills may welcome the reduction in competitive supply, consumers would find some grades or product areas have limited alternatives as Russia has built up an outsized roles in some product areas like pipes.

As previously mentioned, Russia of course has a dominant position in oil, natural gas and other commodities like diamonds and food stuffs such as grains and agricultural products like fertilizers. For anyone interested in further data Statista.com/, OEC.com and Trading Economics all provide good reference points.

The takeaway

Metal buying organizations should brace for considerable volatility.

As the market saying goes “buy on bullets, sell on fear” .

For now metals markets face supply disruption. Prices reflect that. If and/or when some sanity prevails, markets will sell as constraints appear less imminent. In the meantime, expect prices to oscillate with every media release and rumor. Belt up for the ride!

The Global Precious Monthly Metals Index (MMI) rose by 6.8% for this month’s reading. This represents the second month in a row of precious metals inswz increases. Last month the index increased by 4.1%.

Palladium, and to a lesser extent, platinum drove the index higher. Most of the other precious metals held flat or fell.

The palladium price rise this month may have more to do with the anticipated Russian invasion of Ukraine. Although MetalMiner has covered this geopolitical event through the lens of other metals, particularly steel and aluminum, Russia supplies 35% of the world’s palladium. Palladium, as opposed to platinum, has made its way into more newer cars. It has become the “precious metal of choice” for catalytic converters.

The increase in January’s Global Precious Metal MMI comes down to strong palladium demand from the automotive industry. Constrained supply also plays a role.

The Global Precious Metals MMI along with all inflation/deflation indexes from MetalMiner are available as a free monthly report.

Automakers will dictate where palladium and platinum go from here

Although some automotive shortages have eased, automakers give a cloudy view on production forecasts beyond the current quarter. Toyota and Honda, in particular appear cautious while Ford and GM appear more confident about production numbers.

The truck blockade of the Windsor Bridge, a key trade route between Canada and the US, dissipated Saturday only to continue as of press time. Nonetheless the blockade did impact inbound raw material supply to the automotive industry.

Gold – the real story

Now that the US military believes Putin has confirmed his intentions to invade Ukraine, gold looks particularly poised to rise based on technical analysis.  Silver too could follow in gold’s footsteps, should war ensue.

 Source: MetalMiner analysis of Trading View data

 Fed tapering

With tapering already in effect and more to come, gold watchers have likely anticipated falling prices. Moreover, rising interest rates have also historically put a damper on gold prices. But today’s markets look a bit different. Many metal prices have moved without explanation.

MetalMiner uses artificial intelligence and technical analysis to identify buying strategies for a full range of precious metals.

Key indicators

MetalMiner’s own technical analysis/forecasting team has their eyes on the Russian/Ukranian situation, the VIX and key economic indicators such as housing starts, which have started to slow. These indicators and how traders respond to these will dictate where gold goes next.

Actual prices and trends

China palladium increased the most jumping early 23% to $83.33/gram from $67.83/gram. US palladium increased similarly, up 20.22% from $1845/ounce to $2218/ounce.

Silver fell .15% from $23.30/ounce to $23.26/ounce. Gold, meanwhile moved similarly at .15% from $1829.80/ounce to $1832.60/ounce.

 

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