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Price action closed the week on a mixed note with silver and palladium prices losing further ground, platinum settling unchanged, while gold edged higher. Over the quarter, gold was the only precious metal to close in..

03 Oct 2011

LONDON (Commodity Online): Price action closed the week on a mixed note with silver and palladium prices losing further ground, platinum settling unchanged, while gold edged higher. Over the quarter, gold was the only precious metal to close in positive territory, gaining 8%. Gold closed 0.6% up at $1623.3/oz on Friday despite the dollar strengthening against the euro to levels last seen in January. Gold has found support on the downside from physical demand ahead of the week-long national holiday in China. Gold prices remain above those of platinum, despite platinum prices closing in on the average cost of production.

Platinum prices closed mostly flat on Friday at $1518/oz with lower prices drawing good volumes of platinum on the Shanghai Gold Exchange. With the exception of silver, provisional estimates for September show net outflows across gold and the PGMs. Gold outflows reached just under 20 tonnes and, although net redemptions emerged towards the end of the month, the pace of outflows were slower than those that materialised in late August but gold flows are still in positive territory for the year to date at 40 tonnes.

Palladium suffered its fifth month of consecutive outflows, with net redemptions of 141koz, the weakest month since March 2011, taking flows for the year to 338koz. Platinum shows outflows of 32koz, the first month of net redemptions since May and the weakest months since July 2010; however, flows for the year to date are positive at 171koz. Silver registered net inflows of 303 tonnes but flows for the year to September are still negative at 793 tonnes.

The latest CFTC data for the week ended 27 September revealed tactical investors unsurprisingly scaled back their exposure across all four precious metals. Comex gold non-commercial positions fell to their lowest level since January 2009, suffering their largest weekly decline since early August. Short covering (8.4k lots) failed to offset the extent of long liquidation (31.1k lots). Noncommercial positions as a percentage of open interest has fallen to 27%, its lowest since 2008 when positioning fell to 21%.

Speculative positions in Comex silver fell for the third consecutive week to its lowest level since April 2009, primarily on the back of long positions being closed out. Net fund length across the PGMs also declined on the back of a combination of long positions being liquidated and short positions established. Nymex palladium non-commercial positions are at their lowest since May 2009 and as a percentage of open interest at their lowest since March 2009.

Courtesy: Barclays Capital Commodities Research Report


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