Gold & Platinum Shining In 2016!

Ladies and Gentlemen,

Gold has rallied almost 17% this year and most analysts are looking at the Metals markets heading higher, spear headed by the Yellow Metal.

So what has been the key driver of Gold this year? Well, Monetary Policy in US. If we look back at last year one of the reason Gold struggle to rally is because it was cautious about the rate hike.

This year, the drivers have changed. Looking at the Financial Market & Global Economy as a whole. After last months FED meeting we saw Gold getting a lift, upon the cautious dovish notes.  We also saw that China Gold imports were lower recently and heavy restocking, especially ahead of the New Year (Jan - heading into February).






 












So what is the cap then on the upside? Well, as Gold prices rally quickly the downside range can also be greater. Hence why if we saw a huge spike up to $1300 it could be bad for the market. However, if we see prices correcting at these levels (as well as the physical market adjusting) and the market coming into the right support - this could provide for a much more sustained move higher.

Another interesting market... Platinum. 

Platinum flirting with 1,000 per ounce, after a 5 year pressured market and that has not been enough to lift prices at all. The underlying stocks have also been quite high with supply growing also. However, 2016 looks like the year we will see XPTUSD start to base around the 1,000 per ounce mark and prices should be lifted from here.

There is also a strong fundamental reasoning for this sustained move higher. Firstly, South Africa (accounting for 80% of the World's Platinum) and their wage negotiations, which will be very significant. From this, we should see more producer discipline and cut backs in supply growth, this should lift in investor sentiment.   Most of the Rand volatility should also support this wage case.

Secondly, the Jewelry market - which was incredibly weak last year.. although the price elasticity has come back into play this year offering a greater floor for prices.

As always. Trade Smarter

Anish8FX@Atom8.com