At the time of this report early Friday morning, the spot price of Gold has rebounded nicely to the $1,280 area after testing the mid $1,260 area just a couple of days ago.
Causing that recent move to the downside was the Dollar Index surging to a fresh 23-month high at 98.30.
The Dollar was helped by a decline in the Euro to a fresh 22-month low over ongoing concerns about the German economic slowdown and the Pound Sterling hitting a two-month low on concerns that Brexit talks have stalled.
Since then the rally in the U.S. Dollar has stalled giving the price of Gold a chance to recover and move to the upside.
Traders I have spoken with over the pond have said, they are starting to see a pickup of physical demand for the yellow metal especially in Germany as that economy shows signs of further weakening.
A story released by London-based Gold Bullion broker Sharps Pixley today shows record levels of Gold buying by Central Banks which bolstered the price of the yellow metal in 2018 and has continued into the first couple of months of 2019, with 51 tons bought in February alone.
The story quotes the talk that Ross Norman, Sharps Pixley CEO, gave at the Dubai Precious Metals Conference earlier this month. He said that demand from Central Banks in January and February “amounted to 90 tons of fresh buying.” That’s 61 percent higher than the 56 tons bought in the first two months of 2018, and the highest rate of growth since the first two months of 2008.
In recent days, we have seen the Palladium EFP has been coming in confirming the story from some dealers that supplies have been showing up in the Zurich vaults.
This doesn’t seem to be a concern to some investors as the price of Palladium has recovered nicely from the April low at $1,324 per oz.
Some PGM traders expect the price in the near term to test the psychological price level of $1,500 per oz and then rally the price to fresh 2019 highs. There are still investors out there who believe that the Palladium supply shortfall in 2019 will be over 1 million ounces. This belief is keeping a good number of investors “all in” with their investments.
Let’s not forget, this is a very small market and any story that emerges
can move the price in a big way.
Have a wonderful Friday.
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.