(Kitco, Mon. Sep. 23rd, 2019) – After hitting new all-time highs, palladium might be ready for even more gains, with some analysts pointing to the $1,700 level as a reality.
Spot palladium reached a new record high of $1,664.34 early on Monday. Palladium’s December futures also hit a new record high, touching $1,642.90 an ounce level. At the time of writing, December futures were at $1,631.10, up 0.38% on the day.
Higher gold prices, rising on rising Middle East tensions and a breakdown in the U.S.-China trade talks, have also been helping palladium, analysts said.
“Palladium’s move higher is very much a correlation to gold. Gold moved up quite nicely on Monday. Also, we had a silver rally as well as platinum. Palladium followed suit. The precious metals moved higher most likely on mentions from Fed officials of potentially more interest rate cuts,” head of global strategy at TD Securities Bart Melek said on Monday.
December Comex gold futures were last at $1,530.80, up 1.04% on the day, December silver was at $18.68, up 4.66% on the day, and October platinum was at $959.70, up 1.17% on the day.
On Monday, markets were digesting the U.S. decision to send more troops to the Gulf region following the drone attacks on Saudi Arabia’s oil facilities on September 14. This came almost immediately after the U.S. imposed sanctions on Iran, including the country’s central bank on Friday.
Other significant precious metals drivers have been U.S. President Donald Trump’s statement on Friday that he is not interested in just a partial deal with China and Chinese officials proceeding to cancel their visit to U.S. farmers.
Healthy demand
Palladium has also been supported by healthy demand, limited supply, higher equities and liquidity concerns, according to UBS strategist Joni Teves.
“The combination of healthy demand, constrained supply, and challenging liquidity conditions is likely driving prices higher here. Our understanding is that there were some additional supplies earlier in the year mainly from release in pipeline stocks, which likely drove the easing in forwards in H1. But still-healthy demand implies that those stocks should have been well absorbed,” Teves wrote on Monday.
The new high surged past palladium’s significant resistance barrier of $1,620, which means more upside, including $1,700 is possible, said Commerzbank AG commodity analyst Carsten Fritsch.
“It already exceeded the zone of massive resistance at 1,600/1,620 on Friday, opening up scope for a further rise to $1,700. There has been no evidence of late of any significant investor interest in palladium. Net long positions have climbed only marginally, while ETF holdings have remained at a low level,” Fritsch wrote.
Posted by :
Jack Dempsey, President
401 Gold Consultants LLC
( jdemp2003@gmail.com )