150617 precious metals weekly

Page 1

Precious Metals Weekly

Group Economics Macro & Financial Markets Research

First shoe to drop

Georgette Boele, tel,+31 20 6297789

17 June 2015 • • •

Platinum prices break lower, mainly because of a deterioration in eurozone investor sentiment Gold/platinum ratio near extreme levels… …signaling that relative underperformance of platinum is not here to stay

First shoe to drop; platinum prices break lower

the graph below shows, investors have reduced net-positions

Platinum prices are the first precious metal prices that have

in platinum. Even though net-positions have been reduced

fallen out of the trading range. We expect other precious metal

significantly, total ETF positions are still sizeable. Therefore,

prices to follow. Platinum prices broke below the previous low

further position liquidation could weigh on platinum prices in

and there are no major support levels except the 2008 low just

the near-term.

below USD 800 per ounce. This signals that prices could fall

Weaker eurozone sentiment weighs on platinum

further.

Number of contracts

What has caused this movement?

Platinum price

60,000

In general, a deterioration in investor sentiment, more

1,800

50,000

specifically eurozone sentiment, has had a pronounced

1,600 40,000

negative impact on platinum prices (see graph below). Platinum prices have the tendency to weaken when equity

30,000

volatility increases and equity markets weaken. In addition, the

20,000

widening of eurozone periphery spreads also signal a

10,000

1,400 1,200

deterioration in sentiment. This is because of the stand-off between Greece and its creditors. Despite our view that there

0 Jan 13

will be an agreement between, the risk of a Greek “accident”

Jan 14

Jul 14

Net positions (lhs)

(default or even Greek exit) is increasing. This weighs on the economic outlook and sentiment of the eurozone. For

Jul 13

Jan 15

1,000 Jul 15

Platinum prices (rhs)

Source: Bloomberg

platinum, eurozone demand accounts for 40% of its annual catalyst demand.

Gold/platinum ratio near extreme The considerable underperformance of platinum prices among

Weaker eurozone sentiment weighs on platinum Platinum price

precious metal prices has pushed the gold/platinum ratio up to

10y spread Italy - Germany

1,300

0.50

near-extreme levels. This situation is unsustainable in our view. The relative weak price will make platinum attractive as a substitute for white gold in jewellery. In addition, more

1,200

1.00

optimistic news about Greece, a higher US dollar and higher US interest rates should result in platinum outperforming gold, because gold has a higher sensitivity to the latter two.

1,100

1.50

ABN AMRO forecasts 1,000 Jan 15

Mar 15 Platinum price

May 15

2.00 Jul 15

10y spread Italy - Germany

Source: Bloomberg

Investors have been liquidating The weakening sentiment towards platinum is also reflected in the latest speculative net-positioning (up to last Tuesday). As

End period Gold Silver Platinum Palladium

17-Jun Close 14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 1,180 1,185 1,184 1,100 1,050 1,000 950 900 850 800 15.7 16.6 16.0 15.0 15.5 16.0 16.5 17.0 17.5 18.0 1,077 1,216 1,141 1,100 1,150 1,200 1,250 1,300 1,350 1,400 798 736 731 650 675 700 700 725 750 750

Average Gold Silver Platinum Palladium

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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150617 precious metals weekly by ABN AMRO - Issuu