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From the GoldMoney Dealing Desk --
Platinum and palladium prices
have been hit in recent weeks, as fears over a “double-dip”
recession in America mount following the recent surge in oil prices. Unlike
gold and silver, industrial demand is the dominant determinant of prices for
these metals.
As previously highlighted by GoldMoney’s Roman Baudzus,
platinum and palladium are key
components in the construction of catalytic converters. Though demand for cars is rising all
the time in emerging economies such as China and India, any new economic
downturn in America and Europe would cause problems for car companies,
leading to production cutbacks and lower platinum and palladium prices.
Since last summer and the onset
of the US Federal Reserve’s second round of “quantitative
easing”, both platinum and palladium have caught bids from investors concerned
about the debasement of the dollar. But in recent days, rumours
have been circulating that the Fed may curtail or even stop its asset
purchases in June. As experienced market analyst Jim Rickards
of Omnis Investments pointed out on Twitter, these suggestions could be
nothing more than the Fed keeping markets guessing while they work on a
strategy to “sell” a plan for yet more quantitative easing. But
any move towards safe havens – in anticipation that a curtailment of
dollar printing will lead to a new collapse in asset markets – could
hurt platinum and palladium.
However, consistently high
industrial demand from China, as well as reports that Russian stockpiles of
palladium are dwindling, will put upward pressure on the prices of both
metals. Electricity generation problems in South Africa – producer of
76 per cent of the world’s platinum – could also lead to further
curtailments of mining operations, as was the case in
2008, resulting in higher platinum prices.
In addition, last Friday NYMEX
raised the margin requirements on palladium contracts. As this Seeking
Alpha article points out, if NYMEX thought palladium was seriously overbought or in a bubble,
they wouldn’t bother
increasing fixed-dollar margin requirements. Palladium may have reached a
permanently-higher price plateau.
Goldmoney.com
All data and quotes sourced from Reuters.
Published by GoldMoney
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