Precious Metals Weekly
Group Economics Macro & Financial Markets Research
Bubbling below the surface
Georgette Boele, tel,+31 20 6297789
7 May 2015 • • •
It looks like a boring market; but a lot is happening below the surface Higher US real yields more than offset a weak dollar We remain negative on precious metal prices because we expect the dollar rally to kick in again
Looks like a boring market…
Which factors are currently outweighing the impact of a weaker
Since the FOMC meeting in March, precious metal prices have
dollar? Developments in the bond market are. Inflation
moved sideways. For example, platinum prices have ranged
expectations for 5 year ahead have risen in line with higher oil
between 1115 and 1180, gold prices between 1170 and 1225,
prices. In turn, this has also pushed up bond yields in Europe
silver prices between 15.6 and 17.4 with palladium moving
and in the US. In general, higher inflation expectations are
most of the time in the 750 to 800 range. Price action within
positive for gold prices, which is often seen as an inflation
the range, has however been very erratic. These ranges look
hedge. However, this time around gold and other precious
like a bit boring. In fact a lot is happening.
metal prices have been under pressure (with the exception of palladium). Why is this? The rise in bond yields has outpaced
…but bubbling below the surface
the rise in inflation expectations. In short, real yields have
The main reason for the range-trading appearance is that
moved higher and this is negative for gold. In general, higher
opposing factors are offsetting each other. The movements
yields (especially real yields) are negative for gold and other
within the range show that at some point in time one factor is
precious metals because they belong to the group of
more dominant while at another moment another is.
investments that yield zero or almost nothing.
What are the opposing factors?
Higher US real yields weigh on gold
The US dollar remains a crucial variable affecting the price of
Gold price 5y
gold and other precious metals. Surprisingly, the weaker dollar
1,300
US real yields (inverse order)
0.0
has not filtered through to support precious metal prices. For us this is a very negative sign as we remain bullish on the US dollar going forward. If prices can’t profit from dollar weakness,
0.5 1,200 1.0
they will suffer even more when it strengthens. We expect a the dollar rally to kick in again in the coming weeks if US data
1,100 1.5
releases turn out to be better than expected. 1,000 Jan 15
Gold’s negative relationship with dollar
2.0 Feb 15
90-rolling correlation
Mar 15
Gold price
Apr 15
May 15
5y US real yields
1.0 Source: Bloomberg, ABN AMRO Group Economics
0.5
ABN AMRO forecasts End period Gold Silver Platinum Palladium
0.0 -0.5 -1.0 10
11
12
13
Gold vs USD Source: Bloomberg, ABN AMRO Group Economics
14
15
Average Gold Silver Platinum Palladium
07-May Close 14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 1,186 1,185 1,184 1,100 1,050 1,000 950 900 850 800 15.7 16.6 16.3 15.0 15.5 16.0 16.5 17.0 17.5 18.0 1,136 1,216 1,141 1,100 1,150 1,200 1,250 1,300 1,350 1,400 798 736 793 650 675 700 700 725 750 750 Q1 15 1,218 16.7 1,194 786
Q2 15 1,142 15.8 1,120 693
Q3 15 1,075 15.3 1,125 663
Q4 15 1,025 15.8 1,175 688
Source: ABN AMRO Group Economics
2015 Q1 16 Q2 16 Q3 16 Q4 16 1,115 975 925 875 825 15.9 16.3 16.8 17.3 17.8 1,154 1,225 1,275 1,325 1,375 707 700 713 738 750
2016 900 17.0 1,300 725
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Precious Metals Weekly - Bubbling below the surface
Precious metals Gold prices per troy ounces Gold price in USD Gold price in EUR Gold price in JPY Gold price in CHF Gold price in GBP Gold price in INR Gold price in CNY Gold price in BRL Gold price in RUB Gold price in TRY Silver prices per troy ounces Silver price in USD Silver price in EUR Platinum prices per troy ounces Platinum price in USD Platinum price in EUR Platinum price in JPY Platinum price in CNY Palladium prices per troy ounces Palladium price in USD Palladium price in EUR Palladium price in JPY Palladium price in CNY Palladium price in BRL Palladium price in INR Palladium price in RUB Gold forw ard rates LBMA 1 Month Gold Forw ard Offer rate BBA LIBOR USD 1 Month Gold 1 Month Lease rate LBMA 3 Month Gold Forw ard Offer rate BBA LIBOR USD 3 Month Gold 3 Month Lease rate Volatility 1 month gold option volatility 1 month silver option volatility 1 month platinum option volatility 1 month palladium option volatility COMEX & NYMEX positions NET LONGS - GOLD (COMEX) NET LONG ON SILVER (COMEX) NET LONG ON PLATINUM (NYMEX) NET LONG ON PALLADIUM (NYMEX) Total ETF positions Total Know n ETF Holdings of Gold Total Know n ETF Holdings of Silver Total Know n ETF Holdings of Platinum Total Know n ETF Holdings of Palladium Relative Gold/Silver ratio Gold/Platinum ratio Platinum/Palladium ratio Source: Bloomberg
Close
Change 1 Day in %
Change 5 days in %
Change YTD in %
1,186 1,049 141,294 1,085 779 76,110 7,358 3,588 59,795 3,186 Last 16 14 Last 1,136 1,006 135,529 7,056 Last 793 702 94,522 4,922 2,398 50,911 39,974 Last 0.07 0.18 0.12 0.10 0.28 0.18 Last 14.78 26.17 17.56 18.03 Last 106,872 33,999 27,454 18,123 Last 52,335,829 625,648,082 2,662,685 2,938,904 Last 72.63 1.04 1.43
-0.54 -0.22 -0.76 -0.71 -0.29 0.44 -0.31 -1.46 -1.09 -0.71 Change 1 Day in % -1.02 -0.88 Change 1 Day in % -0.39 -0.15 -0.66 -0.24 Change 1 Day in % 0.02 0.12 -0.32 0.04 -1.15 0.80 -0.84 Change 1 Day in % -27.78 -0.96
0.12 -0.42 -0.05 -2.20 1.12 1.27 0.46 0.99 -1.98 0.92 Change 5 days in % 1.73 0.92 Change 5 days in % 0.14 -0.62 -0.20 0.29 Change 5 days in % 2.08 1.18 1.60 2.36 2.50 2.88 -0.45 Change 5 days in % -13.33 -2.04
0.08 6.83 -0.76 -8.15 2.19 1.37 -0.27 14.08 -9.85 14.73 Change YTD in % 4.02 11.30 Change YTD in % -6.56 0.20 -6.91 -6.46 Change YTD in % -0.64 6.20 -1.43 -1.40 13.03 0.71 -14.17 Change YTD in % 252.94 5.40
-13.64 -1.38
5.56 -0.81
0.00 7.94
Change 1 Day in % 6.33 2.94 3.10 0.01 Change net 5 days 1,866 163 -1,778 625 Change net 5 days 115,439 232,704 -6,199 9,946 Change 1 Day in % 0.67 -0.10 -0.25
Change 5 days in % 8.56 3.57 3.77 -4.93 Change net 1 Month 25,757 -15,862 1,170 2,674 Change net 1 Month 293,169 5,330,794 12,854 60,537 Change 5 days in % -1.33 0.21 -1.79
Change YTD in % -14.41 -11.82 7.43 -16.67 Change net YTD 1,647 267 -2,496 -3,895 Change net YTD 946,589 2,537,234 -61,209 -127,986 Change YTD in % -4.00 6.65 -5.73
3
Precious Metals Weekly - Bubbling below the surface
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