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REPORT ON THE GLOBAL PRECIOUS METALS MARKET FOR SEPTEMBER 2017

October 2, 2017, Prague - The most volatile metal in September was platinum, where the difference between the lowest and the highest current price reached almost 13.0% The second one was with 11.0% palladium, followed by silver with 10.0%, and the metal with the lowest price difference was gold with 6.6%.

 

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  Gold Silver Platinum Palladium
Highest price USD/oz 1,357.75 18.23 1,025.25 1,003.50
Date 2017-09-08 2017-09-07 2017-09-08 2017-09-04
Lowest price USD/oz 1,273.30 16.57 908.00 903.45
Date 2017-09-29 2017-09-29 2017-09-29 2017-09-20
 
The development of both platinum and palladium is still interesting. If, in August, the price of platinum was above the US $ 1 000 per ounce for just a minute, in September it kept more than a week above this limit. Also, palladium was over $ 950 per ounce for a longer period, and in the short run even exceeded 
$ 1,000 per troy ounce. The main reason for this is the continuing lack of both metals due to high demand from the automotive industry. However, in the long run, we need to anticipate a decline in demand. The automotive industry is probably expecting a revolution. Although it is now speculated that electromobiles are not capable of replacing combustion engines as quickly as Tesla founder - Elon Musk has precipitated, 
but more car manufacturers are focusing on the development of hybrid engines. Both have a negative effect
on both platinum and palladium consumption, because in any case, the future is environmentally friendly with the least amount of carbon dioxide and nitrogen emissions and hence less use of platinum and palladium 
in catalysts.
 
In September, two major economic events were crucial for precious metals. The first was the meeting 
of the ECB and the speech of its President - Maria Draghi. Its main goal was to weaken the ever-increasing euro. The euro has boosted against the dollar by nearly 10% since the beginning of the year. Although Draghi was trying to convince the markets that the ECB does not like the growing EURO, he did not succeed much. The market kept its growth trend and one euro was still sold for 1.2 US dollars. Markets still expect the ECB to reduce the quantitative easing (QE), and if it does so in October or January, it does not play a crucial role. What is important is that it will happen and it will be another impetus for strengthening the European currency. The second factor that helps the euro is the continuing uncertainty surrounding 
the US president, whose actions are unpredictable.
 
The second economic event was the FED meeting in the third decade of the month. The results of US Central Bankers‘ meetings practically triggered a correction for precious metals. The reason for the decline 
in the price of precious metals in US dollars was that the results of the meetings were very optimistic. The FED has announced that even possible economic shocks will not force it to abandon the previously planned QT program that FED is about to start selling the purchased bonds at $ 10 billion first and then each quarter
to increase by a further 10 billion dollars. How this plan is realistic will probably show us the beginning 
of December, when there will be another increase in interest rates. The FED is under the constant pressure 
of Donald Trump, who is in favor of the weak dollar, because it makes American exports richer and he can argue that he is fulfilling his promises.
 
For the „non-dollar“ investor in precious metals, the penultimate weekend was also important when the German elections took place. Surveys were not as fatal this time as with Brexit or with the US President‘s election
but they could not predict the relatively great success of Alternatives for Germany. Gold traded in the European currency jumped over 2.5% in the first hour after the release of the result. This was mainly due 
to a jump in euro depreciation. In the following days, however, the situation was calm, and gold returned below the threshold of 1100 EUR per troy ounce and one euro was again sold for 1.2 US dollars.
 
However, the strengthening of the euro may not be permanent. The political uncertainty after the German elections has only indicated it. Contemporary events around Catalonia and its referendum on independence and, above all, the expected Italian elections will be another test of his strength.

 

 

Libor Křapka
Chief Executive Officer of IBIS InGold®, a. s.