· Palladium soared over 9 per cent to power above the key $US 2,500 an ounce level for the first time on Friday, boosted by a chronic shortage of the metal in the market and hopes the global economy might be turning the corner.
· Spot palladium was 6.9 per cent higher at $US 2,472.80 per ounce having earlier surged past the $US 2,500 an ounce level to hit a record peak of $US 2,537.06.
· The auto-catalyst metal was also pacing for its best week since December 2001, surging more than 16 per cent. "This is a structural deficit market that has been brewing for years and we don't really see an increase in supply on the horizon to quell that," said Ryan McKay, a commodity strategist at TD Securities.
Palladium has constantly been breaking records, rising more than 50 per cent last year, on a sustained supply squeeze and expectations for stricter emission laws across the globe. Also helping boost prices, China and the United States signed a preliminary trade deal on Wednesday that could spur economic growth, and a Chinese auto industry group said vehicle sales would slow their decline.
Palladium is primarily used by automakers for catalytic converter manufacturing to clean car exhaust fumes. "In an already tight market, we also have supply risks in South Africa due to the power outages," McKay added.
· South Africa, which produces two-fifths of the world's mined palladium, released data on Thursday showing its output of platinum group metals including palladium fell 13.5 per cent in November compared to the same month in 2018.
· Platinum climbed 1.8 per cent to $US 1,022.44 per ounce, having hit a peak since February 2017 at $US 1,041.05 in the last session. Prices were up 4 per cent for the week.
· Elsewhere, safe-haven gold edged 0.5 per cent higher to $US 1,560.43 per ounce, but was headed for first weekly decline in six. Prices were down 0.1 per cent so far for the week.
US gold futures settled up 0.6 per cent at $US 1,560.3.
· There's continued interest in gold buying with political, geopolitical and economic worries globally and haven-seeking buyers in countries with weak currencies, said George Gero, managing director at RBC Wealth Management.
· Gold is also facing some headwinds with stocks at record highs, which is keeping it in a range of about $US1,550-$1,580, Gero added.
· World shares hit record highs after data showed China's economy was stabilising and the world's second-largest economy ended 2019 on a somewhat firmer note as the trade truce revived business confidence.
However, investors were still nervous as the Phase 1 deal failed to address tariffs and some important core issues.
Silver rose 0.7 per cent to $US18.07 per ounce.
· Co-chief investment officer Greg Jensen ofthe world’s biggest hedge fund, Bridgewater Associates, estimates that gold will touch the milestone of $2,000 an ounce (per a Financial Times article). The metal is expected to gain nearly 30% from its current $1550-an-ounce price level. It is worth noting that gold delivered an 18.9% return for 2019. Analysts believe that uncertainties surrounding the Sino-US trade war, global growth worries and geopolitical risks have been adding to the lure of the yellow metal.
Jensen believes rising political uncertainties and major central banks, especially the Fed, allowing higher inflation levels could lead to the upside in gold. In this regard, he said, “there is so much boiling conflict. People should be prepared for a much wider range of potentially more volatile set of circumstances than we are mostly accustomed to.”
Moreover, it is being believed that the phase-one trade deal will help improve trade conditions around the globe but the relief will be temporary. China will have to grapple with 25% tariffs on $250 billion worth of Chinese industrial goods and components that are used by manufacturers in the United States. The tariff-related issues are expected to be dealt with in the phase two of the trade deal (read: Phase-One Trade Deal to Boost These ETF Areas).
· The Reserve Bank of India (RBI) bought 7.5 tonnes of gold towards the end of 2019, making its gold reserves swell to 625 tonnes, a new record.
Data from the World Gold Council (WGC) indicates that in 2019 many central banks showed more confidence in gold.
Reference: Business News, Nasdaq, Business Standard
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