With few data releases today, precious metal trading lacks volume.
Gold support remains strong at the 200d MA of $1,298. With China back in the market
today, the SGE premium has strengthened marginally, from -$4/ozs last week to
broadly flat today. The US 10-year government bond yield has been edging lower over
the past two days, also supporting gold. The next major data release for gold is the Fed
FOMC minutes from the March meeting. While there may be few surprises, the market
would attempt to get a better gauge on when interest rates will start rising in the US.
We still believe that gold rallies will fade.
On the PGM front, things are quiet, with no new developments on the mining front.
Platinum has been shadowing gold, with the platinum/gold spread still at
$100 - $150
Platinum and palladium are seeing a rise in ETF holdings on the back of the strikes in
SA. In the futures market, speculators are also very long. As pointed out yesterday,
although some long liquidation in NYMEX platinum has occurred for the second week
running, the net speculative length as a percentage of open interest remains high,
currently at 58.7%, well above the 1-year and 5-year average levels of 46.8% and
52.7% respectively. However, this is a little lower than the 61.4% level from the
preceding week.
The lack of volume in the PGM markets was highlighted yesterday by the sharp drop in
palladium from $785 to $765 in minutes. However, with the ramp-up in the SA
palladium ETFs, we believe that dips will be bought. Palladium should find support on
approach of $750. We also believe that being short platinum below $1,400 provides
little value from a risk/return perspective.

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