A Rough Week for Platinum and Palladium

Platinum and palladium posted the steepest declines in the precious metals complex over the week. Platinum fell 7.2% to $1,538/oz and palladium dropped 7.5% to $1,022/oz, recording the two largest declines in the group. Silver was not spared either, falling 7.1% to $53.67/oz. These three assets, which are more exposed to industrial and automotive demand, bore the brunt of the renewed risk aversion that swept through markets ahead of the US Federal Reserve’s monetary policy meeting.

The prospect of the Fed’s October 28 meeting fueled selling pressure on assets perceived as cyclical. Platinum and palladium led the declines, with industrial and automotive applications that make them particularly sensitive to growth and demand prospects.

Gold resisted  better, but did not escape the turbulence. The yellow metal fell 1.6% to $4,048/oz, a significantly more contained correction than those seen in its peers.

The dollar acted as an amplifier. The greenback gained 0.3% against a basket of major currencies on Tuesday, adding to pressure on all metals denominated in US dollars. Gold is moving, according to market participants cited during the week, “in line with interest rate expectations and inflation risks,” a phrase that neatly sums up the market’s unstable balance: any increase in rate hike expectations weighs on the metal, while inflation risk provides a floor of support.

What to Watch

• Wednesday, October 28: Fed rate decision
• Wednesday, October 28: Fed press conference
• Thursday, October 29: GDP (preliminary, United States)
• Thursday, October 29: PCE price index (United States)
• Thursday, October 29: Personal income and spending (United States)
• Thursday, October 29: Weekly jobless claims (United States)
• Thursday, October 29: ECB rate decision
• Thursday, October 29: ECB press conference
• Friday, October 30: GDP (flash, euro zone)
• Friday, October 30: Unemployment rate (euro zone)
• Friday, October 30: Employment cost index (United States)