PGM's continue to feel the fallout from VW's emissions scandal

Friday, September 25, 2015

Platinum prices snapped a four day bear run yesterday as prices seemed to find some near term support just above $931/oz after losing over 5% since the start of the week. Prices for the metal most commonly used in catalytic convertors for diesel engines came under substantial pressure this week, dropping from near $984/oz to a fresh year-to-date low of $928.40 on Wednesday as investors continued to experience the fallout from Volkswagen’s emission scandal. Alleged attempts to rig US pollution tests have already damaged the automaker’s reputation and any decision among consumers to shift away from diesel engines could put platinum prices under further pressure. However, spot prices saw a sharp correction higher yesterday as platinum prices attempted to recover some of the week’s losses with spot prices closing just below $955/oz but activity this morning has seen a resumption of selling pressure back towards $950/oz.

Conversely, palladium prices extended gains back towards the 100 day moving average yesterday as investors increased exposure to the metal most commonly used in petrol catalytic convertors. Spot prices closed 1.2% higher on Thursday after Wednesday’s 6+ percentage gain as investors positioned themselves to take advantage of the anticipated increase in demand for petrol cars as the PGM traded towards $663.60/oz before eventually ending the session at $656.40/oz. The platinum to palladium price ratio pushed towards its lowest point in thirteen years and with the investigation now spilling over to BMW the future of small engine diesel cars remains in doubt.

Gold experienced a strong rally yesterday as emerging market fears prompted investors to take shelter in the safe haven. Spot prices for the yellow metal rallied 2.1% yesterday, breaching resistance at the 100 day MA as prices ended the session just below $1,154/oz. It has been a tumultuous week for precious metals what with the Fed choosing to delay their interest rate increase last week and the emerging market currency rout curbing risk appetite across the board. The SPDR Gold Trust ETF has seen holdings increase almost six metric tonnes so far this week as equity markets around the world come under increasing strain but activity early on this morning has seen prices for the precious metal slip back below $1,150/oz, trading around $1,146/oz early on as a firm USD caps moves on the upside.

Platinum/palladium price ratio widens on emissions scandal

XPD Curncy Palladium Spot Oz 2015 09 25 08 11 24

Gold holdings increase on risk aversion

GDTRGOLD Index SPDR Gold Trust 2015 09 25 08 10 35

Events for today

0030

JP

Aug

CPI

1330

US

Q2

GDP &Personal consumption

1445

US

Sep

Markit Composite PMI

1500

US

Sep

University of Michigan Survey

LT

Sep  Copper, Gold & Silver (COMEX) 

 

Oct   Natural Gas (NYMEX) 

Topics: USD, Gold, Platinum, Palladium
More from: Kash Kamal