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The market is looking buoyant for precious metals

by , 10 July 2014

Gold, platinum and palladium continue to edge higher. A weaker dollar is helping to boost prices.

Geopolitical tensions are helping push gold up. And supply concerns over platinum and palladium continue to drive prices higher.

Let's take a closer look at what's going on…

The prices of precious metals continue to rise

Precious metals look likely to complete a “sixth consecutive week of price acceleration,” says Action Forex. This follows a dip in prices last week after the US revealed good employment numbers.

Yesterday, the US Federal Reserve released its minutes of its June Federal Open Market Committee, says Bloomberg. The Fed revealed it’s still committed to keeping “interest rates low for a ‘considerable time’”.

The dollar fell to a “one-week low against a basket of major currencies,” reports BDLive. When the dollar falls, commodities (which are priced in dollars) look more attractive for those bearing other currencies.

Gold is trading at a three-month high

The price of gold is up 11% so far this year, says Bloomberg. The yellow metal is benefitting from “tension in the Middle East and Ukraine”.

In addition to a weaker dollar and geopolitical tensions, gold is also looking to “developments in India,” says BDLive. After increasing the import duty on gold to record levels, expectations are the Indian government will cut this.

This could lead to an increase in demand from India for gold. And, in turn, benefit the gold price.

Palladium continues to soar

Palladium is now trading at a 13-year high, notes Bloomberg. The “metal is heading for a third straight annual shortage amid rising demand for cars”. Palladium is a component used in catalytic converters.

Pushing the price higher was the five-month long strike in the platinum sector in South Africa. This is fuelling supply concerns, adds Bloomberg. SA is the world’s second biggest producer of palladium.

The price of palladium has climbed for 13 consecutive days, says Gold Seek.

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Platinum is also benefitting from the worries over “supply issues from South Africa,” adds BDLive. SA is the world’s top supplier of the metal.

At time of writing, gold was trading at $1,342.12 an ounce, platinum at $1,516.50 and palladium at $873.

So for the moment, precious metals continue to rally. If the dollar starts to strengthen, this will rein in some gains.

The market is looking buoyant for precious metals
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