Precious Metals Watch
Group Economics Macro & Financial Markets Research
04 October 2016
The gates were opened Georgette Boele Co-ordinator FX & Precious Metals Strategy Tel: +31 20 629 7789 georgette.boele@nl.abnamro.com
• Gold prices broke below USD 1,300 per ounce… • …and silver prices below their August low • The 200-day moving averages for gold and silver prices come in at USD 1,257 and USD 17.09 per ounce respectively • A break below these levels would mean that the uptrend is over The bottom fell out under gold prices Over the past few months, gold and silver prices failed to move higher. This resulted in disappointment among investors. When the developments around Deutsche Bank failed to push gold prices higher, investor became really nervous. In this environment, hawkish Fed comments from Mester and Lacker, some better US economic data releases and constructive sentiment on equity markets all weighed on gold and silver prices and pushed them to the lower border of their respective ranges. When the pressure became too high, the bottom fell out under gold prices. When gold prices broke the USD 1,300 per ounce level, position liquidation resulted in a substantial intra-day price fall. Gold prices lost around 2% on Tuesday while silver prices dropped by close to 3%. Is the worst behind us? We don’t think so. If US economic data, including the US employment report on Friday, came in better than expected expectations for a Fed rate hike this year and next year will increase, leading to a higher US dollar and lower gold and silver prices. This means that the downside in gold and silver prices has further to go in the near-term. However, we expect the long-term uptrends to remain in place. This means that gold prices need to bottom out around USD 1,257 per ounce and silver prices around USD 17.10 per ounce, where the 200-day moving average comes in. If gold and silver prices break below these levels, this year’s uptrend is over.
ABN AMRO precious metals forecasts Changes in red/bold End period Gold Silver Platinum Palladium
04-Oct 1,284 18.3 993 705
Dec-15 1,061 13.9 894 562
Mar-16 1,233 15.38 976 563
Average Gold Silver Platinum Palladium
Q1 16 1,181 14.9 975 527
Q2 16 1,258 16.8 1,004 568
Q3 16 1,335 19.6 1,086 678
Source: ABN AMRO Group Economics
Insights.abnamro.nl/en
Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 1,322 1,316 1,325 1,325 1,350 1,400 1,450 18.48 19.17 19.50 19.50 20.00 22.00 24.00 1,018 1,027 1,050 1,000 1,200 1,300 1,400 597 721 650 625 650 700 725 Q4 16 1,320 19.3 1,039 685
2016 Q1 17 Q2 17 Q3 17 1,274 1,325 1,338 1,375 17.6 19.5 19.8 21.0 1,026 1,025 1,100 1,250 615 638 638 675
Q4 17 1,425 23.0 1,350 713
2017 1,366 20.8 1,181 666
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Precious Metals Watch - The gates were opened - 04 October 2016
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Precious Metals Watch - The gates were opened - 04 October 2016