Palladium prices close at their lowest levels since October last year as the European debt crisis weighs upon the demand outlook.
Prices closed the week under pressure with the industrially biased precious metals suffering the largest losses. Silver closed Friday 2.5% lower at $30.96/oz, a five-week low, losing 4% over the week; while Palladium lost 2.2% on Friday and 6.5% over the week to close at $562.3/oz, its weakest close since 4 October last year. Gold prices settled 0.9% lower on Friday and 2.5% down on the week. The heightened uncertainty and European government bond markets remaining under pressure continue to weigh upon prices and the demand outlook.
Our economists note rising yields reflect the depth of the European debt problem and it appears the fiscally stronger sovereigns are reaching their limits in terms of supporting their fiscally weaker counterparts. Our economists believe the euro area is likely to have entered into a recession this quarter. Gold prices have struggled to gain traction as the need for liquidity caps upward momentum, and prices have been unable to escape unscathed from the weaker equity markets and the dollar strengthening further against the euro to levels last seen in early October. Investment demand remains positive with metal held in trust across the physically backed gold ETPs unchanged at record levels on Friday, while physical demand remains sensitive to prices. PGM ETPs softened further on Friday with Platinum losing 4.5koz and Palladium holdings falling by 7.3koz.
Courtesy: Barclays Capital
