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Economists at ABN Amro are expecting weakness in precious metal prices in the coming months due to further rate cuts, lower growth and a strengthening in the US dollar.

Key quotes

“Weaker growth is negative for all precious metals. We expect lower jewellery demand from India and China, lower industrial demand and lower autocatalyst demand. We think that the supply shortage for palladium will ease further in the near term due to lower demand.

“A comeback of the dollar will probably result in lower gold prices. Gold prices tend to fall if the dollar rises.”

“Our view on monetary policy easing for the Fed and the ECB is roughly priced in. If this plays out, the effect will likely be neutral on precious metal prices at current levels.”

“Investor positions in gold are still extreme. Some of the speculative positions in silver, platinum and palladium have been cut back, but there are still sufficient positions that can be squeezed.”

“Investors are still hoping that market panic will send gold prices much higher. We are very cautious. The safe haven behaviour of gold is far from stable as recent weeks have shown and long gold is still a crowded trade.”

 

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