LONDON (Commodity Online): Precious metal prices kicked off the week under pressure, surrendering most of the gains over the past four weeks. Palladium was the weakest performer falling by 2.5% to close at $586.22/oz, its lowest since 20 October. Investor interest remains weak in palladium with physical ETP holdings falling by 19.7koz on Monday, taking outflows for the month to 37.9koz and net redemptions for the year to 498koz.
In PGM news, Impala Platinum has reported two fatalities at its Rustenburg 7 shaft, in turn operations have been suspended until completion of a safety review. Gold prices lost 2.4% to settle at $1680.2/oz amid broad risk reduction, weaker equity markets and the dollar retaining its strength against the euro.
Barclays economists noted positive shifts in political governance in Europe have failed to reassure investors, while in the US, the failure of the Super Committee to come up with the minimum USD1.2trn of fiscal savings needed to avoid automatic spending cuts threatens to derail the US recovery.
US macro data was supportive on Monday with existing home sales up 1.4% m/m in October, above expectations and in keeping with the recent trend. Investor appetite has turned positive in Gold in recent weeks, although Monday’s data were softer. Metal held across the 25 products we track fell by 1.8 tonnes; however, flows for the month to date remain positive at 53.3 tonnes.
On the other hand, physical demand for gold has softened despite the seasonal strength that should materialise in the fourth quarter. Thus, the downside looks more fragile in the near term but the broader macro environment remains supportive for gold.
