Metals Are Higher, But Momentum Remains Negative

Both precious metals (gold and silver) and platinum group metals (platinum and palladium) have maintained their negative momentum despite a small recovery since Monday. Silver continues to be the weakest of them all and has so far failed to receive any support from the bounce in copper over the past week.

Looking at the ratios between the four metals, the current rank from weakest to strongest is as follows: silver, platinum, gold and palladium. One ounce of gold currently costs 62.6 ounces of silver, which is close to a three-month high, while palladium has resumed its outperformance of platinum. The ratio between the two is currently trading near an 11-year low as the outlook for palladium continues to favour this metal over platinum.


The momentum remains negative overall, with copper being the only metal showing a slowdown following the bounce back above USD 3.2/lb earlier in the week. The renewed selling of JPY this week has provided an improved risk sentiment, but so far stock markets continue to receive most of the attention. The recent sharp decline in gold and the subsequent USD 30-plus bounce may have given short sellers something to think about, which may lend some near-term support. Further improved sentiment towards gold and silver may require weaker-than-expected economic data from the US, something that has been in short supply so far this month. The current numbers continue to support speculation about an earlier-than-expected taper by the US Federal Reserve, which is continuing to put the sector under pressure.

We have today been challenging the steep downtrend from the late October highs. If a sustained break above 1,253 USD/oz occurs, some further consolidation could see the price move towards 1,260 USD/oz and possibly 1,268 USD/oz — but probably not much further than that at this stage.