Gold made a giant leap on Sunday night – the new high is now 2135 $/oz or 1940 EUR/oz. In other words, 62.37 EUR/g.
The smoke cleared at the European market open, and we are now trading 40 EUR/oz below tonight’s high.
What is the reason for this extreme? Gold already showed strength in late U.S. trading on Friday. This was reinforced in Asian trading by so-called short covering. Short covering describes the closing of short positions, possibly through limit orders.
However, the trend was also driven by comments from the U.S. Federal Reserve, which could indicate possible interest rate declines in 2024. Corresponding U.S. economic data supported these statements.
The current uncertainties in the Middle East continue to be omnipresent, with a U.S. destroyer in the Red Sea allegedly being attacked by Houthi rebels close to Iran at the weekend. The security situation, therefore, does not appear to be easing.
Silver followed the movement but is still far from its highs. Finally, both metals are in overbought sectors. A consolidation until the end of the year would be logical, but the year-end rally is in full swing for now.
Meanwhile, platinum and palladium are moving ever closer together. There is currently only a 60 $/oz difference between the two metals. There may be a merger this year. The only question is whether palladium will fall further or whether platinum will catch up disproportionately. Our bet is on platinum in this environment – only time will tell whether we are right.
“PGM – Spotlight on Precious Metals” is a commodity column focused on gold and precious metals but mainly dedicated to the widely discussed yet rarely analyzed platinum group metals (PGM). Focused on the industrial applications of the metals as well as their potential as tangible assets, the abbreviation PGM has a twofold significance: With Philipp Götzl-Mamba, we could win an experienced precious metal trader operating at the cutting edge of the industry, sharing his knowledge with us.
