Gold in Position for Fourth-Weekly Gain

APMEX

1/11/2019 12:19:41 PM

Daily Gold & Silver Market Report – 1/11/2018

• Gold poised for a fourth-consecutive weekly gain.
• Some investors unwavering in their confidence in the U.S. economy.
• Rising Palladium prices too low for substantial supply increase.

Building support from predictions that U.S. interest rate hikes could soon cease, Gold rose again Friday morning. Rising interest rates added strength to the American dollar last year and this change to Federal Reserve policy pushed investors toward other assets. A Reuters report published by CNBC also points to widespread nervousness over the ongoing U.S. government shutdown and “President Donald Trump's unbending demand for a wall to be built on the border with Mexico.” Both spot prices and Gold futures were up in early trading.

The U.S. dollar slid downward again this week compared to several other major currencies. This decline came after Fed Chair Jerome Powell's statement that the central bank may be more patient when it comes to interest rate policy. The dollar index has come down over 2 percent since the middle of December. OANDA Senior Market Analyst Craig Erlam said, “The $1,300 resistance level for Gold is looking very vulnerable. Risk aversion has been supportive, but as we're seeing now, its primary driver is the dollar.” If trade tensions between the U.S. and China relax soon, this could mean another boost for Gold, according to the report.

Gold Rally Faces Challenges from Confident Investors

The price of Gold began to rally in fall of last year and continues to trade near the $1,300 per ounce mark. During the fourth quarter of 2018, the S&P 500 dipped 14 percent, sending many stock investors toward safer assets like Precious Metals. The Wall Street Journal observes that Gold futures have “reaped the benefits, rallying 7.3%.” The declining U.S. dollar added even greater interest in safe-haven investments. The report goes on to state many investors are still highly confident about the economy and expect more expansion in the coming year. This buoyancy could mean many will stay calm through the volatility and hold on to existing assets, rather than buy into higher amounts of Gold. The article also points to low sales of American Gold Eagles last year as a sign of limited interest from individual investors.

Palladium Prices Reach All-Time High

On Wednesday, spot prices for Palladium reached $1,344.41 per troy ounce, a record high for the Precious Metal. Previously thought of as an unappealing by-product from Platinum mining, increasing demand from the auto industry has turned Palladium into a rising star. It currently trades at a premium to Gold, something that has not occurred in nearly 17 years. However, the supply of Palladium is not large enough to meet demand, as sales of fuel-cell cars and trucks remain strong. In an opinion piece for Bloomberg, commodities reporter David Fickling believes prices are not high enough to create a surge in supply. Since both are Platinum Group Metals that exist in many of the same deposits, higher prices for either Palladium or Platinum are still needed to incentivize miners to extract more substantial quantities. Therefore prices could continue to rise due to the supply shortfall for several years to come.

At 12:48 p.m. (ET), the APMEX Gold and Silver spot prices were:

• Gold, $1,292.50 Up $3.40
• Silver, $15.72 Up $0.05
• Platinum, $818.10 Down $7.00
• Palladium, $1,346.40 Up $11.20

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