Spot platinum has regained its traditional position above gold this morning for the first time since March, trending up as much as $34 an ounce in New York early trading after ending the day yesterday with a $26 gain.
I lost an office bet where I predicted platinum wouldn’t cross gold until tomorrow. I had thought the markets had already priced in the news that Anglo Platinum was shutting down four platinum shafts due to low margins, reducing global supply by 400,000 ounces.
Many traders were apparently awaiting official word from AnPlat, but may be trading more on speculation that China must do something about air pollution. Smog in Beijing has been higher than considered safe for human habitation for several days this week, trapping people indoors, bringing worldwide attention and loss of face for China’s leaders. Any large-scale program to cut air pollution will require a very large amount of platinum and palladium.
Speaking of China, strong physical gold buying was seen again overnight, and stocks hit a 7-month high. Gold hit all-time record highs in Tokyo for the second day straight, due to the weakening yen. South African gold production was announce yesterday to have fallen by 32% at the end of 2012 due to worker strikes and safety issues.
In Europe, the Eurozone as a whole saw a trade surplus, but the German economy was announced to have contracted by 0.5%. There was a favorable reaction to bond sales by both Spain and Italy yesterday, but the euro has softened a bit against the dollar after an impressive run, on profit taking.
In the U.S., Fed Chairman Bernanke in a speech late yesterday called the U.S. economy “fragile” and strongly hinted that the $85 billion a month quantitative easing was not going to end any time soon. This has supported gold prices this morning.
On the debt ceiling front, Secretary of the Treasury Geithner warned yesterday that there was no way for the government to dodge around the need to raise the debt ceiling. At the same time, rating agency Fitch has warned that it will downgrade the United States’ credit rating if a debt ceiling deal is not forthcoming.
These developments have gold trading over its 200 day moving average for the third day in a row, as well as moving people into Treasuries as a safe haven.