Precious Metals Can’t Find Common Ground – Platinum Falls While Silver Gains

Gold is caught in a complex situation between geopolitical tensions, central bank decisions and inflation data the US dollar continues to gain momentum, but gold seems to bounce up and down each day but holds closely to the 1215 price level. Traders see a 74 percent chance the Fed will raise its target for overnight lending between banks by its September 2015 meeting. The dollar has jumped 6.6 percent in the past three months, the best performer of 10 developed-nation currencies.

Gold futures fell moving closer to erasing this year’s gains as the outlook for an improving U.S. economy and higher interest rates curbs demand for the metal as an alternative investment. The accelerating economy means investors are shunning gold even after the U.S. expanded sanctions against Russia and ramped up its military campaign to combat Islamic State in Iraq. Yesterday, the dollar climbed to the highest since June 2010 against a basket of 10 major currencies, combining with prospects for higher rates to erode the appeal of the metal as a hedge against inflation.

Gold dropped as much as 0.5 percent on Thursday when ECB President Mario Draghi didn’t disclose the size of a monetary stimulus plan after announcing that the central bank would buy covered bonds and asset-backed securities for at least two years. Silver added 56 points to reach 17.103 but remains very weak while platinum is trading at 1251.05 down $18.00. Prices for platinum and palladium fell to new lows Thursday, as slowing growth in Europe and China sparked concerns about demand for the precious metals. Prices for the metals, which are used in automotive exhaust filters, have fallen sharply in the past few months amid concerns of slowing growth in Asia and Europe.

If you want to know just how awful a week it’s been on Wall Street, look no further than gold and utilities. Wall Street closed flat despite European markets being savaged overnight as investors responded to the European Central Bank’s latest plan to stimulate the economy. Gold is a classic fear trade. It often does well when investors have a case of the heebie-jeebies and want comfort in something they can hold, touch and easily understand.

That’s why it should come as no surprise that gold is holding its own this week as Ebola in the United States and protests in Hong Kong have investors feeling a twinge of unease. IMF chief Christine Lagarde has warned that the global economy could be sinking into a prolonged period of “mediocre” growth which could endanger efforts to bring down unemployment worldwide. Ms. Lagarde said that the world’s economy has weakened in the past six months, despite the efforts of leading central banks to boost activity with ultra-low interest rates.

recovered 4 points to move above the $3 price as traders bought up the cheap commodity. National Day holidays in China, the world’s biggest consumer of copper, kept the Shanghai Futures Exchange shuttered today through Oct. 7. Operations resumed at Freeport-McMoRan Inc. (FCX)’s Grasberg copper mine in Indonesia after open-pit work was suspended because of an accident on Sept. 27. Grasberg had still been shipping concentrate, or partly treated ore. Indonesia barred exports of unprocessed mineral ores in January. Copper futures dropped below $3 a pound to the cheapest in more than five months as signs of deepening economic malaise in Europe dimmed demand prospects.