Weaker Dollar Buoys Precious Metals

Weaker Dollar Buoys Precious Metals

We start the week seeing all four metals in positive territory. Keeping them all afloat is a weaker U.S. dollar.

The price of Gold is now heading into the higher end of its most recent trading range. Some Wall Street Gold Traders have indicated that they believe the price of Gold has built a base and is ready to break thru the $1,232 spot level. Not one of the traders I spoke with this morning indicated that they were currently holding on to a long position. It appears to me they will wait for a breakout above that level before entering the market.

I find it interesting that there is virtually no movement of late in the ETF arena. Investors seem content just holding on to their investments at this time. I imagine they have the same mind set as the Wall Street Gold trader.

Gold market participants continue to keep a close eye on the developments in the Brexit negotiations and the Italy-Brussels budget conflict. Any one of these two issues going forward could affect the price of Gold.

The Platinum Market

It has been a while since I have written about the Platinum market, so to satisfy some requests here you go.

We are always talking about the U.S. Dollar Index and its relationship to the price of Gold. The price of Platinum can also be linked to the activity in the U.S. currency.

A weaker dollar could support higher Platinum prices, but there are, and have been, challenging fundamentals that consistently limit higher gains. The lack of industrial action, a weak South African Rand and stronger output thanks to years of major restructuring by miners, are factors that lead to surpluses in the Platinum market. Over market supply could reach 300,000 thousand ounces in 2018.

Also hurting the demand, is a poor outlook for Platinum usage in Diesel engine vehicles and lack of Commodity Hedge Fund participation. This has kept the price under pressure after the price peaked in January.

Even with the news that the major South Africa’s Platinum producers, are cutting production, this hasn’t given the price a significant boost.

The price of Platinum have recovered somewhat since its August low, but it seems it would take a lot more to move the price higher even with a South African production cut.

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.