The Precious Metals Continue to Rally

Precious metals continue to gain value, with gold on track for a stellar monthly performance. Gold prices have been moving consistently higher since December 11, when prices bottomed at $1238 an ounce.

As of 3:30 PM Eastern standard time, gold futures based on the most active February contract is trading up five dollars on the day to be currently fixed at $1293.50. Silver has also been actively trading higher, gaining over a full percentage point yesterday and 0.85% today, with the most active March futures currently fixed at $1674 ½.

However, it has been palladium that has been shining the brightest and exhibiting the most significant daily gains, with today’s price move no exception. Palladium futures are currently trading at $1056.05, which is a net gain of $13.60, a +1.30% gain. Unlike the other precious metals, palladium has been consistently trading above its 50-day moving average since the end of May. Most impressive is the fact that it recently moved above platinum in terms of its pricing which is currently trading at $923.30.

Today’s gains in the precious metals complex are based mostly on U.S. dollar weakness, with the exception of palladium. Spot gold, for example, is currently bid up by $4.70 and fixed at $1287.70. On closer inspection, only $1.40 of today’s price gains is attributable to buyers bidding up the precious yellow metal. The remaining gains of $3.30 are a direct result of a weakening U.S. dollar, this according to the Kitco Gold Index.

Holiday Trading Evident

One key factor affecting market pricing recently has been a reduction in volume and liquidity as many traders close their books on the year and await the beginning of a new year next week. Just over 130,000 contracts were traded in gold today as the daily volume compresses. The beginning of December gold contracts at its high had a daily volume over 430,000, which clearly illustrates that volume is about 25% of normal trading activity. We would expect daily volume to continue to be extremely low as we finish off this week, this month and this year which all occur on Friday.

Wishing you as always, good trading,