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The precious metals market profited from some healthy gains all around this week. Gold prices plummeted below the strong $1,700 resistance level before making 2-day gains to previous levels. The price of the precious metal fell to as low as $1,678/oz before making its way back up to $1,730/oz where it sits currently. The gains made in the last 2 days represent a 3.09% gain. Silver felt a similar pattern this week where it briefly dropped below the $24 price tag. The white metal has since recovered above the $25 level where it currently sits, with 1 ounce of the metal costing $25.05. Platinum profited from a steady rise this week. It ends the week 5.41% higher at $1,214/oz returning to mid-March prices. Palladium too was subject to healthy gains this week. The metal started the week at $2,576/oz and ended the week at $2,708/oz demonstrating a 5.12% 5-day gain. Rhodium made some slight gains this week after losing value following its all-time high price of $29,800 just recently. The metal ended the week at a price tag of $27,100/oz. 3.24% higher than its Monday price.
Gold along with other precious metals this week profited following a weakened US dollar, a less-than-expected American Infrastructure stimulus and decreased 10-Year US Treasury yields. Coming off its 4-month highs, the US dollar retreated which returned gold prices above its $1,700 psychological level. Consequently, the weakened US dollar also decreased high US Treasury yields which have been the main driver for Gold’s recent downtrend. Joe Biden’s underwhelming US$2.2 trillion infrastructure stimulus was off US$1-2 trillion the market expectation, which is what may have caused the weakened US dollar.
GOLD PRICES (6 Months)
Source: Tradingview: Gold Futures COMEX 6 months
Silver currently sits just above the 200-day Exponential Moving Average (EMA) where it has strong support and even more so in the $24 level just below. Interest rates changes from the USA are what will likely move the market towards an uptrend or downtrend, so keeping an eye out for them is key. It is possible that if the metal were to fall past the $24 line again, it could fall all the way to $22.
The environment around Platinum and Palladium stays bullish as vehicle emission regulations tighten and demand for both metals increases. So much so that Public Investment Corp, the South African worker pension fund, has invested US$7.4 billion into Platinum as it believes “the supply and demand dynamics are quite solid and they are talking to a tightening market which should be supportive of prices.” Post pandemic trends show that although demand has dropped 7%, the supply dropped an even larger 20% which has caused greater scarcity in the Platinum market.
It is difficult in these current times to feel out which way the world is moving and what we can predict from different markets. On one side, we have the USA and many Asian countries that are steadily making their way out of the COVID-19 situation while reopening and easing restrictions. On the other hand, Europe (with the exclusion of the UK) has a more pessimistic feel to it as it faces a third wave. Only time will tell which direction the market will take.