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James Hyerczyk

Analysis and Recommendations:  Last week, October Platinum fell to a six-year low while September Comex Silver and December Comex Gold consolidated for a second consecutive week.

Platinum is under pressure on speculation that supplies are ample amid slowing demand from China. According to Bloomberg, BMW AG has cut production this year by 16,000 cars in China and may revise profitability goals amid slowing sales. The country accounts for at least 23 percent of global demand for platinum and palladium, which are mainly used in catalytic convertors. 

Platinum is getting hit on both the supply and demand sides of the equation. Traders are looking for the weak demand from China to continue with the country in the midst of is slowest expansion in 25 years. A rebound in platinum mine output in top producer South Africa after a five-month strike last year is helping to increase supply. 

Comex Silver and Gold closed higher last week in uneventful trading. Both markets actually firmed after the release of the U.S. Non-Farm Payrolls report for July. The report showed the economy added 215,000 new jobs last month. This was below the consensus but in the range. Traders increased the odds of a September rate hike from 47 percent to 55 percent. The odds of a December rate hike are set at 100 percent. An interest rate hike would curb the appeal of investments like gold and silver that don’t pay interest or dividends.

 The biggest influence on precious metals remains the U.S. Dollar. Friday’s price action by the dollar suggests investors aren’t too confident in a September rate hike. Speeches by FOMC Members Fischer and Lockhart on Monday could offer some insight into the timing of the first Fed rate hike since 2006. This could produce some volatility in the metals complex. Traders are also likely to react to Thursday’s U.S. Retail Sales report. 

A weaker dollar next week could trigger a short-covering rally in gold and silver. The daily chart indicates there is room to the upside to run, but gains are likely to be capped by bearish traders looking for more favorable entry prices ahead of the likely rate hike by the end of the year. 

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports. 

Weekly October Platimum

 

Weekly December Comex Gold

 

Weekly September Silver

Major Economic Events for the week: 

       Date                    Time           Curr                          Events                                                                          Forecast  Previous

Mon Aug 10

 7:15am ET

USD

 

FOMC Member Fischer Speaks

         
 

9:00am ET

USD

 

FOMC Member Lockhart Speaks

         
 

12:25pm ET

USD

 

FOMC Member Lockhart Speaks

         

Tue Aug 11

8:30am ET

USD

 

Prelim Nonfarm Productivity q/q

   

1.6%

-3.1%

 
   

USD

 

Prelim Unit Labor Costs q/q

   

-0.1%

6.7%

 
 

11th-13th

USD

 

Mortgage Delinquencies

     

5.54%

 

Wed Aug 12

10:00am ET

USD

 

JOLTS Job Openings

   

5.42M

5.36M

 
 

10:30am ET

USD

 

Crude Oil Inventories

     

-4.4M

 

Thu Aug 13

8:30am ET

USD

 

Core Retail Sales m/m

   

0.5%

-0.1%

 
   

USD

 

Retail Sales m/m

   

0.5%

-0.3%

 
   

USD

 

Unemployment Claims

   

272K

270K

 
   

USD

 

Import Prices m/m

   

-1.0%

-0.1%

 

Fri Aug 14

8:30am ET

USD

 

PPI m/m

   

0.1%

0.4%

 
   

USD

 

Core PPI m/m

   

0.1%

0.3%

 
 

9:15am ET

USD

 

Capacity Utilization Rate

   

78.0%

78.4%

 
   

USD

 

Industrial Production m/m

   

0.3%

0.3%

 
 

10:00am ET

USD

 

Prelim University of Michigan Consumer Sentiment

   

93.5

93.1

 
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