Gold gains significantly and attracts other precious metals with it

Oil prices also came under pressure in the wake of increased risk aversion on the financial markets. Brent fell to USD 60.3 per barrel in the afternoon, but made up for its losses as trading progressed. This morning, Brent is trading above USD 61 again. This was helped by a stronger-than-expected 3.7 million barrel drop in U.S. crude oil inventories reported by the API yesterday after the close of trading. There is also continued speculation that the OPEC+ may decide on stronger production cuts at its meeting on Thursday and Friday. Since the beginning of the week, reports have been circulating that production could be cut by another 400 thousand barrels per day. According to the Iraqi Oil Minister, key members are expected to agree on this. Iraq as a source of this information, however, raises questions. The Iraqi oil minister has not yet managed to implement the existing production cuts even close to them. In recent months Iraq has even produced more than before the cutback agreement. In our view, a stronger cut in production is indispensable if OPEC+ is to prevent a massive oversupply and a renewed drop in prices in the first half of 2020. However, the 400 thousand barrels per day available would not be sufficient. But more seems hardly realistic. Russia is likely to pay for its participation with other concessions. This applies in particular to the exclusion of natural gas condensates from the production cuts. According to Energy Minister Nowak, Russia would meet its own reduction target in December if natural gas condensates were excluded.


Precious metals: Gold increases significantly and attracts other precious metals with it

US President Trump gave the gold price a noticeable boost yesterday with his Twitter news. As gold was in high demand as a safe haven, it rose 1% to a 4-week high of USD 1,484 per troy ounce this morning. Trump’s tweets to the trade dispute with China (see industrial metals below), among other things, initially triggered a slide in equity markets and led to a sharp fall in US bond yields, from which gold benefited. Last night, the US House of Representatives also passed a law sanctioning Chinese officials for oppressing Muslim minorities. China has repeatedly threatened retaliation and banned interference in internal affairs. Uncertainty among market participants and thus a robust demand for gold is also caused by the fact that the Democrats are pressing ahead with the impeachment proceedings against Trump.


In the wake of gold, the other precious metals also rose yesterday, with silver and platinum growing disproportionately. Silver is trading at $17.3 an ounce this morning, and platinum is clearly above the $900 an ounce mark again. And even though palladium is rising at a disproportionately low rate, it is still rushing from record to record. What is striking here is that the correction phases have become increasingly shorter this year. While in the spring it took three months, in the summer it took four weeks and in November only two weeks. In our view, the rise in palladium prices is exaggerated.



Industrial metals: Trump causes unrest, nickel biggest loser


Several Twitter messages from US President Trump yesterday led to a significantly higher risk aversion among market participants and pushed almost all metal prices noticeably into the red. Especially in line with the weak opening of US stock markets, metal prices have fallen. Trump had previously tweeted that there might be a trade agreement with China only after the US presidential election next year. This means that the hanging game and thus the uncertainty could accompany the markets for a long time to come. The LME Industrial Metal Index lost 1.3% yesterday, dropping to a 4-month low. The biggest loser was nickel, which had already been hit. It fell by 2.5%. This morning the price decline of nickel continues: it falls below 13,200 USD per ton. This means that it has lost more than 20% since the beginning of November alone. From its 5-year high at the beginning of September, nickel has now even fallen by 30%. The downward momentum at the SHFE in Shanghai has also picked up considerably in the meantime. In our opinion, the momentum indicates that the price decline will continue somewhat. And nickel has still been up more than 20% since the beginning of the year. So far it has eclipsed the other industrial metals, which are all trading below their levels at the beginning of the year. Only iron ore can compete with nickel.