Precious metals are holding on to yesterday’s strong gains this morning, with gold edging up to a new two-week high. Palladium is holding on to a fresh 3-1/2 year high.
Precious metals broke sharply higher in early morning trading on Tuesday, and retained that strength through the day. Gold and silver closed yesterday near the middle of the day’s price range, while platinum and palladium closed near the top of their trading range as strike negotiations in South Africa’s platinum sector broke down.
Gold was up $7.90, Silver up 13¢, platinum up $29.00 and palladium up $12.00, despite a stronger dollar.
Russian gold mines are reported to be high-grading their operations (only mining the best veins) to combat lower prices, with January-April total output 29.7% over last year. This acceleration of output probably was in response to anticipated sanctions over Russia’s seizure of the Crimea from Ukraine.
The chairman of the South Africa Reserve Bank warned that depleted stockpiles at platinum mines would mean lower exports, and a widening of the nation’s trade deficit. The mines, which have been closed since January 23 due to a violent labor strike, produce 40% of the world’s platinum. Until now, the mining companies have been using platinum ore that the stockpiled before the strike, which has helped keep platinum prices low. Yesterday’s announcement is another sign that that is coming to an end.
Wall St. opened lower after a flat day yesterday, and European stocks are down as markets try to decide what the new European Central Bank stimulus measures mean. In Asia, the Nikkei was up modestly, while the Hang Seng was lower on profit-taking. Shanghai closed flat.
Oil is the commodity in the news today, as Al Qaeda seizes the city of Mosul, the second-largest city in Iraq next to Baghdad. The militants are now moving against nearby oil refineries, endangering Iraq’s ability to export oil. Al Qaeda is reported today to have overrun the Turkish embassy there, taking 48 Turks hostage. Libyan oil exports are still halted, as rebels in that nation continue to hold the oil terminals in major port cities. To top it off, U.S. petroleum stockpiles are reported to be lower. These developments have sent the price of Brent crude to over $110 a barrel. Higher oil prices are usually a bullish signal for gold.