Platinum, palladium prices cool as striking miners go back to work
By Barbara Kollmeyer and Carla Mozee, MarketWatch
MADRID (MarketWatch) — Prices for gold climbed for a second session on Tuesday, continuing to bounce after the metal resisted falling through a key support level following last week’s strong U.S. jobs data.
Gold for August delivery GCQ3 +1.17% rose $14.10, or 1.2%, to $1,248.90 in electronic trade, adding to Monday’s gain of $22.20, or 1.8%, on the Comex division of the New York Mercantile Exchange.
Carsten Fritsch, analyst with Commerzbank, said in emailed comments that gold failed to drop through $1,200 an ounce after Friday’s payroll data, which has triggered some covering of short positions by investors.
The addition of 195,000 new jobs in the U.S. last month bolstered the view that the Federal Reserve later this year will begin tapering its program of bond purchases, which analysts have said has been beneficial for gold prices.
The gains in gold over the past two sessions have erased Friday’s drop of 3.1%, which was triggered by a better-than-expected report on U.S. job creation in June.
Gold prices this year have struggled in part on speculation of a wind-down in stimulus by the Fed. Prices for the precious metal in the second quarter sank 23%. Read: John Paulson’s gold fund loses 65% of its value for 2013 so far
But whether gold has hit the bottom remains to be seen, according to Fritsch -- Deutsche Bank is among those seeing and end to selling soon. “We are probably close to the bottom, but not there yet, given continued ETP (exchange-traded product) outflows and rising real rates,” said Fritsch.
In a note, he and other analysts said exchange-traded-fund outflows have already totaled nearly 52 tons for July so far. For the first time since May 2010, holdings of gold ETFs tracked by Bloomberg have dropped below 2,000 tons to around 1,994 tons, they said.
Fritsch said gold is at risk for more selling on Wednesday, when the Federal Open Market Committee’s minutes of its June 18-19 meeting will be released. Investors are hoping to glean more clues as to the Fed’s tapering plans.
“Tomorrow’s minutes could lead to a renewed rise in interest rates and provoke further ETP selling,” Fritsch said, adding that the situation in Egypt also “needs to be watched carefully as well, given potential safe-haven buying.”
Earlier in the day, the Chinese government said its consumer price index rose 2.7% in June from the year-ago period. The reading was above an increase of 2.5% expected in a Dow Jones Newswires poll of analysts.
Gold is widely seen as an inflation hedge and store of value, and rising inflation in China comes at a time of largely subdued inflation in the U.S. and other countries worldwide. But Fritsch said China inflation has been very subdued in recent months, while demand for gold has been very strong when looking at Chinese gold imports via Hong Kong.
Strength in the U.S. dollar DXY +0.12% did take some steam out of gold’s rise on Tuesday, said Fawad Razaqzada, technical analyst at GFT Markets. A stronger greenback can pressure dollar-denominated commodity prices by making futures more expensive for holders of other currencies.
He noted the euro fell and the dollar rose after Portugal’s opposition socialist leader reportedly said “the country needs a new bailout program and must hold elections, blaming the government for creating a ‘serious crisis.’” The dollar also rose against the British pound on weak U.K. data.
Elsewhere in the metals market Tuesday, September copper HGU3 -1.36% fell 5 cents to $3.05 a pound.
Platinum and palladium prices cooled from Monday’s sharp gains as thousands of mineworkers at Anglo American Platinum Ltd. ZA:AMS +1.46% AGPPY +2.21% went back to work on Tuesday morning after a wildcat strike that started Sunday.
Platinum for October delivery PLV3 +0.42% fell 40 cents to $1,361.60, and September palladium PAU3 +0.86% tacked on $1.10 to $695.50 an ounce.
Read also: The easiest way to buy physical gold
Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @MWBarbaraKollmeyer.
Carla Mozee is a reporter for MarketWatch, based in Los Angeles. Follow her on Twitter @MWMozee.
