Commerzbank: Palladium Creeps Closer to Gold Price
Palladium priceshit a record high Thursday and at one point were within $30 an ounce of gold,Commerzbank says, although the spread has since widened again. Nevertheless,palladium’s recent gains may have been “excessive,” Commerzbank says. “We attribute the price surge - which happened very quickly -to buying on the futures market, as the trading volume yesterday was twice ashigh as on average in recent months,” Commerzbank says. “In a small, partlyilliquid and still very tight market, this buying caused the price to reactaccordingly. The fact that lease rates are still high reflects the tightness onthe market, even though palladium ETFs [exchange-traded funds] have seen hardlyany more outflows in the last three weeks. We regard the price rise - palladiumhas soared by nearly 40% since mid-August - as excessive. Thanks to its strongupsurge yesterday, the palladium price has come to within a good $30 of thegold price for a time, something we would not have believed possible just a fewmonths ago.” The spreadhas widened back to around $65 early Friday, basis the spot market. In thefutures market, December palladium peaked Thursday at $1,161.50 an ounce.Commerzbank analysts comment that clouds over the auto market, which usespalladium for catalysts, “are becoming darker and darker” after weaker carsales in the China and European Union lately, in addition to a decision by theChinese government against halving the purchase tax for cars. “Given that theChinese auto market is gasoline-dominated and may well see the first decline insales for the year as a whole in over 20 years, palladium demand shouldn’treally increase in the next few months,” Commerzbank says.
By Allen Sykoraof Kitco News; asykora@kitco.com
Bannockburn:Markets Scaling Back Fed Expectations For 2019
Friday November 16, 2018 08:15
Investor expectations for monetarytightening by the Federal Reserve next year are being scaled back “quietly andwithout much fanfare,” says Marc Chandler, chiefmarket strategist with Bannockburn global forex. “Overthe past week, the implied yield for next June and December [has] eased byaround a dozen basis points,” he says. “Roughly half of the decline can beaccounted for by shifting expectations for as early as Q1 19. Theimplied yield of the April contract [has] fallen about seven basis points thisweek. Fed Chair [Jerome] Powell's speech this week acknowledged potentialheadwinds that could emerge next year, but he gave no reason to think theFed would not hike next month and the early part of next year.” Meanwhile, somemarket participants are taking note of comments made Thursday by Fed officialsRaphael Bostic and Neel Kashkari. Chandler points out that both expressed concern about the slowing ofworld growth as a reason for the Fed to pause. “Yet these are among themost dovish regional presidents, who have opposed every rate hike or nearlyso,” Chandler continues. “The foreign slowdown story is only theirlatest arguments. And part of the problem with the global slowdown storyis that the contraction in the world's third- and fourth-largest economies(Japan and Germany, respectively) were anomalies and both economies appear tohave resumed their expansion at the start of Q4.”
By Allen Sykoraof Kitco News; asykora@kitco.com
SP Angel: Gold Gets Safe-Haven Boost FromBrexit Uncertainty
Friday November 16, 2018 08:15
Safe-haven assets such as gold are beingunderpinned by uncertainties surrounding the political situation in the U.K. asthe country deals with the Brexit issue, as well as the ongoing U.S.-Chinatrade war, says commodities brokerage SP Angel. “Gold remains on track for thefirst weekly gain in three as [U.K.] British Prime Minister Theresa May isdefying demands to quit as she battles to keep control of her fractiousgovernment long enough to deliver a Brexit deal,” SP Angel says. Spot gold wasup $2.60 an ounce to $1,215.60 as of 8:05 a.m. EST.
By Allen SykoraFor Kitco News
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