Dealing Desk: Hawkish Tone Shakes Market

This week, clients have been net buying in silver and palladium, whilst net selling gold and platinum.

Clients have been speculating the market and have been taking advantage of the price reduction as silver dipped below the psychological level of $17.00/oz

GoldMoney’s clients have favoured the Singapore, Canadian, and London vaults this week with less preference being shown for the Swiss vaults.

Kelly-Ann Kearsey, Dealing Manager at GoldMoney, said that all eyes were on the release of the US Federal Reserve minutes from the April meeting. Gold dropped more than 1% on Wednesday after the release, hitting a spot session low of $1,262.45/oz whilst the US dollar reached a three-week high.

Markets had already priced in the expectations of an interest rate hike this year but the minutes provided a hawkish tone toward raising rates. This implied that the rate hike could be as soon as June, providing that economic data points to a stronger second-quarter growth compared to the 0.5% growth recorded for the first quarter.

On Tuesday, the US Housing starts data and industrial production data was released, which had been strong, potentially giving added support to the early rate hike, as stated by the FOMC.

Platinum prices have remained steady at around $1,000/oz. There is a possible expectation of stronger demand for platinum as it is used in catalytic converters. Due to the recent tighter environment controls, Europe will be applying Euro 6 emissions standards to all new diesel cars.

19/05/16 16:00. Gold lost 1.8% to $1,249.36, Silver declined 5.2% to $16.40, Platinum decreased 4.9% to $1,008.55 and Palladium reduced 6.8% to $561.45 Gold/Silver ratio: 72

Notes to editor
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