US auto sales impact so far in 2016
Apart from the tumult in global stock markets and the weak manufacturing data from the giant Chinese market, there have been other major factors affecting platinum and palladium prices recently. Platinum futures traded on COMEX (New York Commodities or Mercantile Exchange) for April expiry fell by almost 5.4% during the past five trading days. In the same time frame, palladium futures for March expiry gave up a whopping 12.5%.
Platinum and palladium are extensively used as autocatalyst in vehicles. The sales figures for cars and other automobiles can have a significant impact on the prices of these precious metals. During the last month, around December 17, 2015, platinum and palladium prices saw a lift due to strong automobile sales figures in Europe. However, the recent US auto sales number did no good for these metals. The US hit a record of 17.47 million cars sold in 2015. The number outperformed the record 17.41 million sales in the year 2000.
Platinum and palladium trade below moving averages
The recent plunge in the price of platinum and palladium have got them trading below their 100-, 50-, and 20-day moving average marks. Platinum is trading at a discount of 9.1% discount from its 100-day moving average price, whereas palladium is at a 20.9% discount from the same. The RSI (Relative Strength Indicator) for platinum was 43, whereas the RSI for palladium was 27 as of January 11, 2016. A lower RSI—especially below 30—suggests a possible bounce back in price will likely be in store just around the corner.
These falls in platinum and palladium along with the weakness in gold and silver have caused mining stocks like Kinross Gold Corporation (KGC), Coeur Mining (CDE), Pan American Silver Corporation (PAAS), and Newmont Mining (NEM) to fall by 9%, 9.7%, 4.6%, and 7.8%, respectively, on a five-day trailing basis. These four companies together make up 10.7% of the price changes in the VanEck Vectors Gold Miners ETF (GDX).
For more analysis, check out Market Realist’s Metals and Mining page.