In this Weekly Market Report for Precious Metals, we see some downward movement in prices across the board, with gold making slight gains on Monday, October 17, 2016. Currently, speculation about when the Federal Reserve will raise interest rates in the biggest short-term driver on gold prices. While silver is also sensitive to this speculation, platinum and palladium are not being affected at this time. Right now, investors are speculating that the Fed will raise rates by 0.25% in December, and that gold will reach $1400 per ounce by year’s end. Investors are speculating that mining will actually come into play and be a longer-term influence. There has been downward pressure on mining company profits so far this year as mining supply has contracted. We are also seeing a few trends worldwide currently, including competitive devaluation of currencies outside the U.S., and inflationary trends developing in countries whose currencies are experiencing devaluation. Negative interest rates are also influencing money market funds.
Gold began the week at $1256.40 per ounce. By Thursday, it was up slightly to $1261.05. Friday saw a sharper decrease to $1251.75. On Monday, gold ended at $1254.80. More mining supply will lower the price of gold. Quarterly mining numbers are released with substantial lag; we will have preliminary numbers for the third quarter in December. The gold to silver ratio is at historic levels right now and it is not stable. Thirty years ago one ounce of gold bought about thirty ounces of silver. Now that number is closer to sixty-eight.
Silver started the week at $17.48 per ounce, and was up to $17.59 on Thursday. On Friday, it dropped down to $17.47. Silver remained down on Monday, ending at $17.40. Experts predict that if interest rates begin to rise it would be more favorable to silver. There will likely be some good investment opportunities coming up, during lows in silver prices.
Platinum began the week at $960.00 and was down to $935.00 at the end of Thursday. On Friday, it dropped again to $933.00. Monday it saw only a slight drop to end at $932.00. Platinum is currently feeling pressure from a drop in the value of the currency in South Africa, the top producer of the metal. The country is responsible for 73% of global annual supply. The good news for platinum is that there is no longer a significant threat of the miners going on strike.
Palladium started the week at $664.00 and was down to $642.00 on Friday. On Monday fell only slightly to end at $641.00. Palladium continues to struggle despite strong automotive sales in China and the United States. About 70% of overall palladium demand is from the automotive industry.
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