Gold’s Gleam Diminishes Behind Palladium’s Brightness

Muted trading is the overall characteristic of gold today, it traded within an extremely narrow range of just under $10. Gold futures traded to a high today of $1559.80, and a low of $1550. As of 4:30 PM EST is up $0.60 and is fixed at $1558.50.

Although we have seen gold trade under pressure before moving sideways the precious yellow metal has been extremely resilient in the light of U.S. equities which have been moving to new highs over the first three weeks of this year. After hitting a new all-time record high on Friday of last week, the Dow Jones industrial average has softened ever so slightly, but is still trading over 29,000. Today the Dow lost 9.77 points (-0.03%), and is currently fixed at 29,186.37.

Even with today’s small gain of 14.57 points (+0.16%) the NASDAQ composite closed at a new record high today of 9385.38. The S&P 500 closed just below Friday’s all-time record high, and is currently fixed at 3321.75, a net gain of 0.96 points (+0.03%).

Recent concern about the coronavirus in China has diminished slightly. This according to Daniel Briesemann, analyst at Commerzbank, as reported by MarketWatch today, “The financial markets no longer appear to be viewing the coronavirus in China with such grave concern…The Chinese authorities announced measures today that are intended to prevent the further spread of the virus. Apparently, this has somewhat reassured the markets,”.

With the upcoming celebration of Chinese New Year’s on Saturday, January 25^th there has been concern that the spread of the virus could lead to softer gold purchases by the Chinese, a desired gift during this celebratory period.

Palladium Gains 20% in the First Month of 2020

Palladium continues to be the precious metal with the largest gains. In just the month of January it has gained about 20% as it moves to new record highs on almost a daily basis. Today palladium futures are currently fixed at $2364.70, this after factoring in today’s gain of $131.70 (+5.90%). The underlying cause of the spectacular rise in value comes down to simple fundamentals; supply and demand. Simply put demand is greatly outweighing supply.

This precious metal is highly used in industry primarily in the automotive sector. It is one of the few metals which also include platinum and rhodium that have the ability to remove the pollutants created from automobile omissions. Each of these three metals has a unique ability to combine with a specific pollutant. It’s ability to bind with hydrocarbons, carbon monoxide and nitrogen oxide and release water, nitrogen and carbon dioxide in its place makes this metal an essential component to the modern-day catalytic converter.

Expanded demand by China as demand for automobiles has grown exponentially, and the limited supply of palladium is at the core of this current run in the precious metal. As long as China produces more automobiles with combustion engines and the supply of palladium remains constant, we can expect the precious white metal to retain or increase value in the future.

Wishing you as always, good trading,