Gold gains evaporate after Greek rejection

In the Lead: “Graeco-Teutonic Wrestling”

Over in the PGM space, the opening bell for platinum showed it being down $10 at $1,609 per ounce and also indicated palladium losing $7 to slip to $682 the ounce. ETFs stepped in to buy platinum and palladium last week with both metals showing a bit of an improvement in investor sentiment based on the CFTC-reported data. As regards the PGM niche, this morning’s Standard Banks (SA) analysis paints the following picture in its positioning and general tenor:

“Futures market positioning in PGM remains cautious (although it must be remembered that the data only covers the week ended 24 January, and therefore does not include the rally that occurred in the wake of the FOMC announcement). ETF positioning data on the other hand, which does include the period subsequent to the rally, shows growing investor interest. It remains to be seen whether this will gather momentum. Should ETF buying maintain this momentum, we would view this as a sign that investors are shrugging off their skepticism of the past month.

As for palladium, the SB team notes that “ETFs appear much more confident in palladium’s prospects, having added 41.800 ounces (the largest increase of the past 12 months) to their holdings, with a return to the levels seen in mid-December 2011. Platinum at $1,500 and palladium at $600 are too low based on cost pressures in the industry and our ZAR forecast (around 8.00 against the dollar). Over the long term, we still favor palladium over platinum.”

The bid on rhodium remained at $1,425 while copper lost almost 1%. Crude oil fell half a percent and the US dollar was ahead by 0.66% on the trade-weighted index, reaching the 79.43 level. Stock index futures fell on Monday as the Greek drama kept risk appetite at bay. The Dow opened with a near-100 point decline this morning in New York.

No report these days would be complete if we did not include at least a couple of news bits from China. Over the weekend, that country’s National Audit Office sounded an alarm bell that will continue to be heard for some time to come. The NAO said that China faces an “unignorable” risk owing to its still unbalanced, uncoordinated, corrupt local government and (basically) unsustainable economy. Chinese Premier Wen was quick to rebut the NAO findings with his observation that “at present, government debt is generally safe and controllable.”

That said, given the delicate situation in which the country currently finds itself in, the market’s consensus is that the PBOC will not rush into any major easing policy despite recently slowing economic metrics. Too much of a “good thing” could bring too much of a rise in inflation. Such a stance was more than reinforced by the reluctance to reduce bank reserve requirements – a gesture that India’s central bank recently undertook to keep things economic on the boil…

Until tomorrow, all eyes on the Euro Debt Cup Finals...

Jon Nadler is a Senior Metals Analyst at Kitco Metals Inc. North America

Blog: http://www.kitco.com/ind/index.html#nadler

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About the Author
Jon Nadler Jon Nadler is a Senior Analyst at Kitco Metals Inc. North America
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