Market essentials /May 2009/
May was a rather successful month for the precious metal market. Gold and silver prices increased substantially, prices for platinum and palladium remained practically constant.
The major factor that continues to affect the markets is the relation between the main world currencies and concerns about the future of the financial market.
Gold is once more viewed by the investors as a reliable hedge against possible dollar failure and excessive liquidity that was pumped into the world financial markets as a part of anti-crisis measures again became a force “heating” the market.
After passing a local minimum about $860/ounce, gold prices rapidly recovered the losses and reached the levels around $960/ounce. It is explainable by resumed gold purchases by institutional investors (hedge funds) as well as independent funds. The most important statement of this kind was made by the Chinese authorities who declared that in order to avoid concentrating all the currency risks in the US dollar the country resumed purchasing available metal for the gold and currency reserves. Taking into account that most of the metal extracted in the country is already being accumulated in its gold and currency reserves, this information substantially increased the demand for gold on the world market, with consequential growth of the metal prices.
Due to similar factors supported by information about the increased demand from industries, silver prices also started to grow and are currently approaching the level of $15/ounce. As we expected, platinum did not exhibit any substantial volatility, maintaining neutral trend and oscillating around $1120-1190/ounce.
During the next month, upward trend on most of the precious metal markets can continue. At the end of May, a number of auctions is scheduled by the FRS to place American bonds, which, under the conditions of anticipated low demand for them will cause decrease of the US currency exchange rate and drive growth of the prices for gold and other metals.
| Date | Au | Ag | Pt | Pl |
|---|---|---|---|---|
| 01.05.2009 | 975.6 | 15.3 | 1203.9 | 235.3 |
| 08.05.2009 | 964.8 | 15.1 | 1275.9 | 260.5 |
| 15.05.2009 | 933.5 | 15.1 | 1231.0 | 247.4 |
| 23.05.2009 | 928.1 | 14.3 | 1202.3 | 244.1 |
| 1.4% | 7.7% | -2.5% | -1.5% |
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