Friday’s price action in precious metals and crude oil was largely defined by repeated attempts to recover some of the sizeable damage that profit-takers inflicted upon them in after-hours trading. Gold prices on the spot market gyrated quite violently (and in varying directions) this morning (the range was from $1,398 to $1,413) albeit the $1,400 mark was maintained for the time being.
Barclays Capital opines that “a combination of reduced investor appetite amid improved macroeconomic sentiment and rising interest rates suggests duller times ahead for gold. The tightening cycle, which is already under way in emerging economies and which we now expect to kick in sooner than expected in the West, does not bode well for gold either,” the Barclays analysts said in a Friday morning market note.
The situation was largely similar in silver, where a wide trading range was once again on display (from $32.52 to $33.19) along with the usual plethora of explanations as to why this was the case. Certainly lacking from the list of such explanations was the one clarifying why silver should gain 83 cents on the back of a weaker than anticipated US Fourth Quarter GDP figure (reported at 2.8% as against expectations of a 3.2% growth level). Offsetting some of the negativity arising out of the GDP report, the University of Michigan/Thomson Reuters survey revealed that the American consumer’s sentiment has risen to a three-year high this month.
As for platinum and palladium, any shrinkage of the fear/greed premium in crude oil (it was last seen trading at $97.20 per barrel) was seen as rather helpful to the complex. The logic is that if oil returns to more or less ‘normal’ price levels then automotive sales might not take the hit that was being factored in just a day or two ago and reflected in the huge slump in the two metals. The slight erosion of the fear premium manifest in oil helped the US dollar gain some ground on the trade-weighted index this morning.
The former gained $10 to reach $1,791.00 per ounce and the latter rose $15.00 to touch the $788.00 mark the ounce. The same Barclays snapshot analysis we referenced above observed that there is scope to “maintain a positive outlook across platinum and palladium as market balances are set to tighten this year on the back of slower palladium stock releases from Russia, modest supply growth from South Africa and continued recovery in industrial demand.” Rhodium remained static at a spot bid price of $2,380.00 per troy ounce.