The cost of platinum group metals approached multi-month lows

The cost of platinum group metals approached multi-month lows. Platinum quotes fell below $900 per troy ounce, losing more than 10% in less than three weeks. Palladium fell 9.5%. Investors believe that demand for metals in the near future will be weak against the background of the Fed’s tight monetary policy and the weak economic recovery in China.

The price of platinum on August 8 for the first time since the beginning of July fell below $900 per troy ounce. According to Investing.com, the price of the metal reached $899.5 per ounce, which is almost 3% lower than the August 7 close. The decline continues for the third week in a row, during which time the metal has lost more than 10% in price, and its quotes have approached a minimum since October 2022. During the same time period, palladium fell 9.5% to $1,204 an ounce, close to the lowest levels since December 2018.

Other precious metals declined in price less actively. During the day, gold fell only 0.5% to $1927.5 per ounce, which is only 2.9% below the values ​​of three weeks ago. Silver fell 1.7% to $22.74 an ounce, the lowest since March.

The general decrease in the cost of precious metals is facilitated by the growth of the US currency on the world market. On Tuesday, the DXY index (the dollar against the six leading currencies) rose to 102.8 points, up 0.7% from August 7 and 3.2% from three weeks ago.

Investors fear that the Fed’s tight monetary policy will continue. “Ahead of the September monetary policy meeting, the Fed is clearly eyeing the incoming data, so everyone’s attention is riveted on Thursday’s US inflation data. Core consumer prices in the US are expected to rise 4.8% year-on-year in July,” explains Andrey Maslov, an analyst at FG Finam. At the same time, inflation in the country fell to 3% in June, the lowest level since 2021.

The outpacing decline in platinum and palladium is also associated with weak data on the Chinese economy, since their main consumer is the automotive industry. The General Administration of Customs of China on August 8 reported that exports from the country in January-July decreased by 5%, imports – by 7.6% in annual terms, and in July these figures fell 14.5% and 12.4% compared to last year.

“The slow recovery of the economy in China, which is the largest consumer of precious metals, has led to a decrease in investor interest in them,” says Yevgeny Mironyuk, an expert on the stock market at BCS Mir Investments.

Chinese statistics significantly affect the entire range of commodities used in industry. According to Tsifra Broker analyst Daniil Bolotskikh, industrial metals are not only platinum and palladium, but also silver. “The demand for gold from the industry is less than 10% of the global demand, the precious metal is mainly used in the jewelry industry and investments,” says Mr. Bolotskikh.

Under the current conditions, the decline in prices of platinum, palladium and silver may continue. “All three industrial metals are in a downtrend,” Yevgeny Mironyuk believes. Analysts allow a further decline in the price of gold, but less significant.

According to Daniil Bolotskikh, if the central banks continue to increase demand for gold, the price of the metal will not fall below $1,850 per ounce. Andrey Maslov believes that in the coming months prices will most likely be in the range of $1880-2000 per troy ounce.

Vitaly Gaidaev