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As projected there have been some price changes this week in the precious metals market ahead of the US interest rate decision. The majority of market participants are expecting an increase in interest rates. Although this in already largely reflected in prices it is possible to see another fall.
The price of gold fell down to $1065.45 per ounce on Friday. The Euro cold not continue to hold ground against the US Dollar at 1.10, the price of gold in Euro dropped to €972 per ounce. The low prices in both US and European markets is fueling physical demand. Invest bars of all sizes are popular investments, particularly the smaller bars ranging from 1 ounce to 250 grams. We saw the price of gold scrap go down as prices dropped again. We could see a price drop to a multi-year low of $1045 per ounce. If support levels do not hold a price drop to $1000 per ounce is not inconceivable. A more positive attitude, however, could trigger a counter-movement toward $1090 per ounce. The week ahead should define the movement.
Silver started the week at $14.60 per ounce. It fluctuated during the week between $14.35-$14.10. Then on Friday we saw it drop to $14.00 per ounce and soon it fell to a new six-year low of $13.76 per ounce. One contributing factor to the significant price decline was likely the announcement of the “Index Rebalancing”, the liquidation of 890,000 ounces of gold and 12 million ounces of silver by the Bloomberg Commodity Index. This will be discussed further in early January. Despite the low prices industrial and investment demand remained low.
Platinum also fell last week. It had been at a three-week high of $880 per ounce. By the end of the week it was around $820 per ounce. More troublesome news from the South African mining industry emerged. Angle American, one of the leading mining companies and the world’s largest platinum producer announced massive restructuring. In the next few years 85,000 jobs will be cut and many unprofitable assets will be closed down or sold. Dividend payments were suspended for the next 18 months.
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