Commodity Blog

Commodity Prices – Platinum

Many commodities fell today as the hedge funds and other big speculators continued cutting long positions on the industrial and main agricultural commodities, expecting China to grow slower than was expected back in 2011. Copper and platinum turned out to be the main losers on worsened expectations, while oil even hit its 2-month low today.

Copper is very dependent on the pace of growth of the Chinese economy. The country consumes about 40 percent of the world’s production and even slightest drop in growth would mean a significant drawdown in copper demand. The metal is already down about 5.3 percent this month.

Platinum once again trades below gold’s price despite the fact that it’s a rarer material. Being an industrial metal with a heavy reliance on the automotive sector, it reacts with a great volatility to any signs of poor performance from China, which is the world’s biggest car producer according to the latest available data.

Oil is a connected story. Having failed to advance past the major resistance level at $127/barrel in late March, this energy commodity is going straight down with a new minimum since February 15 touched today. As the forecasts for China’s GDP growth are revised down both domestically and internationally, the speculative demand for oil is vanishing quickly.

Copper opened $3.5885/pound today after closing at $3.6205 yesterday on COMEX. Today it is up to 3.6220 as of 16:49 GMT. Platinum is down from $1,579.50/ounce to $1,573.00 today, while oil (Brent) is currently down $121.41 to $118.59 per one barrel.

The descending triangle pattern (the yellow lines) has formed on the daily chart of platinum. This pattern is a strong indicator of a downward trend. This chart is of particular interest as it shows that March was a clearly bearish month for the metal, which was rising since the beginning of the year. Platinum isn’t unique among precious metals in such a behavior as gold and silver were also sliding in March after the two-month rally, though platinum hasn’t dropped as sharply as those two metals.

The cyan line shows a suggested entry level in case the price would break below the lower yellow line, confirming the pattern, while the green line indicates a recommended target. A word of caution for traders, though: the pattern has started immediately after an uptrend, therefore there’s a possibility that the downtrend is just a correction that would be followed by another rally.

Click the image to enlarge it to a full-size screenshot:

If you have any questions or comments regarding this chart pattern for platinum, please feel free to reply below.

Metals rose today, but ended week with losses anyway on the signs of economic slowdown across the world. Gold ended this week flat.

Yesterday, traders have seen evidenced of problems in Europe and China. Today, even the United States made market participants worried. New home sales fell from 318,000 in January to 313,000 in February, even though they were expected to rise to 326,000.

Gold advanced from $1,644.10 to close at $1,661.10 per ounce today on COMEX. Silver went up from $31.50 to $32.25 per ounce today in New York. Platinum closed at $1,626.50 per ounce, following the advance from $1,619.90 to $1,637.90. Copper was higher from $3.7990 to $3.8165 per pound today.

Concerns about Europe quickly returned to markets driving commodities down. Surprisingly, among precious metals only silver, the metal tending to profit less from uncertainty and pessimism than other precious metals, was able to gain.

There were bad news from Europe that justified the worries. The costs of Italy’s debt increased. Fitch Ratings warned that the planned 50 percent haircut of Greece’s debt can be considered a default:

An EU invitation to private investors in Greek government debt to exchange their bonds for new debt with a 50% lower notional value would likely result in a post-default rating in the ’B’ category or lower depending on private creditor participation.

The returned fears made most commodities, even precious metals, fall. The Standard & Poor’s GSCI Index of commodities dropped 1.3 percent. Some analysts argue that the decline wasn’t a start of a downward trend, but merely a correction after the strong rally on the previous day.

Gold declined to $1,743.50 from $1,746.60 per ounce on COMEX. Silver spot price advanced from $35.12 to $35.37 per ounce. Settlement of platinum fell to $1,649.60 from $1,657.0 per ounce.

The concerns about the credit crisis in the European Union continue to haunt markets and that helps to support prices for precious metals. Great Britain also has its share of problems that spur investors to buy precious metals as a safe haven.

Both the Central European Bank and the Bank of England left their interest rates unchanged, but expanded their bond purchases programs. The same monetary policy decision had a vastly different effect on currencies of the nations, boosting the euro, but weakening Britain’s sterling. Yet the fact the policy makers of European Union and Britain embarked on quantitative easing undoubtedly means problems in both of these regions and that’s beneficial for safer assets, like gold and silver.

The BoE was rather dovish in its outlook:

The weaker outlook for, and the increased downside risks to, output growth mean that the margin of slack in the economy is likely to be greater and more persistent than previously expected.

The ECB wasn’t optimistic, either:

The underlying pace of monetary expansion continues to be moderate. Ongoing tensions in financial markets and unfavourable effects on financing conditions are likely to dampen the pace of economic growth in the euro area in the second half of this year. The economic outlook remains subject to particularly high uncertainty and intensified downside risks.

Gold advanced from $1614.0 to $1652.0 per ounce on COMEX today as of 18:13 GMT on COMEX, rising for the second day. Spot price for silver jumped from $30.46 to 32.11 per ounce. Platinum settlement climbed from $1478.0 to $1507.0 per ounce.

Gold rose today as the decline of prices attracted investors to the precious metal. Gold also gained after Federal Reserve Chairman Ben S. Bernanke spoke about possibility of additional stimulus for the US economy, but failed to detail an actual plan a the next round of quantitative easing.

Bernanke said “the Federal Reserve has a range of tools that could be used to provide additional monetary stimulus”. He also was rather optimistic about the economy in the longer term:

Notwithstanding the severe difficulties we currently face, I do not expect the long-run growth potential of the U.S. economy to be materially affected by the crisis and the recession if — and I stress if — our country takes the necessary steps to secure that outcome.

The statement improved sentiment on markets, but precious metals reacted somewhat strange as gold rallied, while silver fell.

Futures for delivery of gold in December rose $21.10 (1.2 percent) to $1,784.30 by 11:10 on COMEX, yet the yellow metal was still heading for the first weekly loss in eight weeks. Contract for delivery of silver in December dropped $0.003 to $40.79 per ounce. October futures for delivery of platinum advanced $2.50 (0.1 percent) to $1,824.90 per ounce on NYMEX. Contract for delivery of palladium in December gained $0.3 to $753.50 per ounce.

Platinum, along with all other precious and industrial metals and commodities, took a huge hit today, dropping at a fastest pace since February 2011.

The US stock market dropped more than 2.5 percent today, as the country’s 2-year treasury notes reached the minimum yield level since 2009. The traders look to be afraid of the upcoming economic stagnation in the United States that will wipe the demand for many commodities, including platinum, which is used in the car-building industry to make the catalysts.

It is believed by some market experts that the investors are forced to close their positions in commodities to cover their losses in the stock market, which is experiencing a real disaster as of now. In the long-term, a lot will depend on tomorrow’s US nonfarm payrolls report.

Spot platinum price declined from $1,780.00 to $1,725.50 per troy ounce or more than 3 percent as of 17:24 GMT today, reaching a daily low at $1,715.70 — the metal’s minimum July 12.

Gold fell, posting the biggest two-day decline in seven weeks, and other precious metal dropped as the European Union pledged to safe Greece from the default if the nation’s government will proceed with the austerity measures. The stronger dollar reduced demand for precious metals as an alternative investment. At the same time, yesterday’s drop of fuel prices diminished appeal of gold and silver as a hedge against inflation.

Adam Klopfenstein, the senior strategist at the broker Lind-Waldock, commented:

Gold is losing the flight-to-quality bid in the near term as the leaders are working toward overcoming the Greek hurdle.

Futures for delivery of gold in August dropped as much as $19.60 (1.3 percent) to $1,500.90 per ounce by 13:45 on COMEX, the lowest price since May 19. The metal tumbled 3.4 percent in the past two days, the biggest drop since May 5. September futures for silver fell $0.366 (1 percent) to $34.65 per ounce. Futures for delivery of platinum in October slipped $17 (1 percent) to $1,680.50 per ounce on NYMEX. September contract for palladium delivery dropped $11.85 (1.6 percent) to $731.50 an ounce.

Crude oil fell today as the Federal Reserve lowered its growth forecast, causing the speculation that demand in the US, the biggest world user, will fall. The central bank kept the interest rates unchanged on today’s meeting and signaled that it’s going to maintain stimulus for prolonged time. Earlier crude gained as the US inventories declined more than expected. August futures for crude oil delivery fell as much as $1.11 (1.2 percent) to $94.30 per barrel on NYMEX, following yesterday’s advance by $1.24 to $95.41.

Gold jumped above $1,550 today as volatility on currency markets made precious metals more appealing as an investment. The euro fell today against the dollar on the speculation that Greece’s Prime Minister will face difficulties in implementing austerity measure even after he won the confidence vote. August futures for delivery of gold gained $7 (0.5 percent) to $1,553.40 per ounce by 13:50 on COMEX. July silver futures advanced $0.36 (1 percent) to $36.739. Futures for platinum delivery rose $5.20 (0.3 percent) to $1,752.40 per ounce on NYMEX. September futures for delivery of palladium went up $3.40 (0.4 percent) to $770.65 per ounce.

Almost all hard commodities are falling today. Big drops can be seen in silver, gold, oil and platinum. Despite a favorable situation in the US stock market, the commodities seem to be bothered by the possibility of the monetary policy tightening.

Commodity speculators are awaiting Federal Reserve statement on the future of the US financial regulation that will be released tomorrow. The market sentiment goes that Ben Bernanke may stop buying treasury notes with Fed’s money, effectively closing down the main fuel source for the speculative growth in the all-favorite silver, gold and oil. Meanwhile, further credit tightening in China is a sure-fire killer for the rally in the industrial metals.

Silver posted the biggest single day absolute loss in years today, following a streak of 9 consecutive days of gain. Nevertheless, April remains a huge winner month for this metal. Gold managed to decline to the minimum level since last Wednesday, confirming its yesterday loss, which followed an all-time record high. Platinum goes down for the first day in the last 5 days, still trading quite low compared to the above-mentioned precious metals.

Spot silver price decreased from $46.85 to $45.30 per troy ounce after reaching as low as $44.42 per troy ounce today. Gold declined from $1,506.86 to $1,503.15 after going to as low as $1,492.90. Platinum is now trading at about $1,803.00 as of 17:31 GMT after opening at $1,825.70 today.