Dollar’s Ongoing Slide Lifts Gold

Market Gage Gold Market Insights

The U.S. Dollar continues its slide, giving the price of Gold a boost this morning. Overnight, the Dollar Index traded down to the next level of support we indicated in Fridays comment at 90.34. In other currencies, the euro and sterling continue to strengthen, putting more pressure on the dollar.

Overnight. the price of Palladium hit an all-time high on CME March contract at $1,133.00. At the time of this report, the price has retreated to $1,117 as fund profit taking emerged this morning.

Open interest in the CME March Palladium contract has increased and now stands at almost 37,000 contracts. PGM forecasters predict another year of substantial deficits in supply giving the price of Palladium a continued strong bullish bias. As we reported in the past, if this rally continues, car companies will be forced to look for an alternative as higher Palladium prices will increase the cost of each vehicle.

For those who actively trade Palladium, one cannot ignore how terribly low the CME Warehouse stock holdings are. As of the most recent report, the CME registered holdings are 12,082 ounces and the eligible holdings are at 28,608 ounces. So across all warehouses there is a total of only 41,000 ounces, compared to the open interest of 37,000 contracts. Thirty seven thousand contracts times 100 ounces in each contract equals 3,700,000 ounces. You can see even if a small amount of the open interest stands for
delivery there could be a significant shortfall.

Have a wonderful Monday.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.