Weak manufacturing data
The fall in the Chinese manufacturing data has blurred hopes for price recovery for platinum group metals. Platinum and palladium are often used as industrial precious metals. Their demand may most likely be adversely affected by the slowed manufacturing sector in the large consumer market in China. These precious metals may once again face a tough year ahead.
Platinum fell 0.97% on Monday, January 4, 2016. Platinum futures for March expiry closed at $884.5 an ounce after touching the low of $874.7. Palladium remained the worst performing precious metal on Monday as it retreated by almost 3.2% and closed at $544.2 per ounce. Palladium reached its lowest mark in more than two weeks at $538.3 on Monday.
Rising geopolitical tensions and financial instability pushed the US dollar higher. This rise once again posed weakness for dollar-denominated precious metals like platinum and palladium. Gold and silver, however, buoyed on Monday due to haven calls. The rise in gold and the fall in platinum and palladium advantageously affected the gold–platinum to gold–palladium ratio.
The gold–platinum to gold–palladium ratio signifies the number of platinum to palladium ounces it requires to buy one single ounce of gold. On Monday, These ratios rose 2% and 5.6%, respectively. The rise in the ratio indicates extended weakness in platinum and palladium and a relative strength gain for gold.
The mixed performance of these four precious metals on Monday had a mixed reaction from the mining sector. The mining ETFs like the Sprott Gold Miners ETF (SGDM) and the SPDR S&P Metals and Mining ETF (XME) fell 0.23% and 1.3%, respectively. On the other hand, mining stocks like Sibanye Gold (SBGL), Primero Mining (PPP), and Agnico Eagle Mines (AEM) rose 3.8%, 3.1%, and 0.45%, respectively. Together, the three stocks make up almost 8% of the VanEck Vectors Gold Miners ETF (GDX).