Morning Market Update: Jan 16

January 16th, 2013 by

Platinum yesterday hit a three-month high after rising for six straight sessions, shrugging off the headwinds of a strengthening dollar. NASCAR-like, gold tucked in behind the new precious metals leader and drafted behind platinum, and silver followed likewise, all posting notable gains.

Platinum prices are seeing a resurgence to their normal place above gold on the news of Anglo American Platinum shutting down two mines and selling a third. Costs of mining platinum have been near the spot price for quite a while, making profitable mining operations difficult. Analysts predict that there will be a 400,000 ounce shortage in platinum this year, though some point to falling European car sales as mitigating demand. However, it seems China will be pressured to confront the problem of air pollution in its cities, some of the world’s worst, and this could increase demand for platinum and palladium for industrial smokestack scrubbers.

Today is seeing some consolidation in precious metals and also the Euro after recent gains. There is a large amount of economic data due to be released in the U.S. today, and Obama’s announcement of unilateral gun control measures via executive order will also be garnering attention.

Gold prices may see protection from a strengthening dollar from the Bundesbank’s confirmation that it is repatriating half of its foreign gold reserves, reminding ordinary people that, despite what the governments may say about there being no need for private citizens to hold gold, the central banks continue to buy it for themselves.

by David Peterson