Precious metals
We continue to look at the US government bond yield for short-term direction in gold.
The 10-year bond yield moved higher again this morning after falling below the 200day
MA yesterday, in the wake of reports that Russian President Putin had called back
Russian troops to their barracks after military exercises. However, indications are that
the move to recall troops excludes troops deployed to Crimea.
Despite the uncertainty, markets in general seem more upbeat this morning, with the
Russian rouble and Russian equities strengthening following yesterday’s selloff, while
Brent crude has declined from above $112/bbl yesterday to well below $110/bbl
today.
The higher US bond yields and improved risk appetite in global markets should weigh on
gold. Demand in Asia remains subdued, with the SGE premium still in negative territory.
Technically, gold remains bullish, as long as it remains above $1,325. With NFP
numbers coming up on Friday, we doubt gold would see large moves ahead of the data
print.
Platinum remains at close to the $1,450 level, with the market awaiting any news from
South Africa. Should the strike last long enough that producers cannot deliver metal to
consumers, we would expect platinum to move higher, possibly towards $1,600.
However, we would become concerned about the impact on jewellery demand (around
30% of demand) should the platinum price rally too far and too fast. Ultimately, we
expect the price to decline again once production normalises, given our belief that metal
availability is not a major problem – it’s just the price at which metal will be attracted to
the market in the absence of producer supply that may be problematic.

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