The start of April has been an excellent time for the precious metals market. Surges in price within the last week have been the largest in months. Gold has been on a consistent uptrend since the first of the month. Last week, on the last day of March the price for the bullion stood at $1,679/oz. The price has since increased a healthy 3.69% to $1,741/oz. Continuing the uptrend was Silver which also made consistent gains since the start of April where it’s shown a big 5.54% gain from $23.85/oz to $25.17/oz. Platinum prices represented immense gains this week. The vehicle emission reducing metal ended the month at a price of $1,155/oz and rose to $1,247/oz where it stands today, a gain of 7.96%. Rhodium, has yet again recorded the highest gains the week, like it usually does. The metal recorded an incredible 10% gain from $26,000/oz to $28,600/oz in the last week alone. This week has been an excellent one for investors involved in the precious metals market.
The slash in precious metal prices has also been the cause for its rise this week. US Treasury yields, which have been increasing in the last few months, doubled from 0.85% in December to 1.745% last week. The US 10-Year treasury note has since dropped to 1.67% and the effect was felt this week in the precious metals market. This has shown that investors are showing caution regarding economic recovery which had received large amounts of optimism. This caution can be largely attributed to the rise in COVID-19 cases globally with a third lockdown being imposed in many European countries.
Gold Prices (1 MONTH)
Source: Tradingview; Gold Futures COMEX
The rise in Rhodium has shown what a volatile and potentially risky investment it may be. Global Rhodium supplies are tightening and “greatly exceeded” expected declines. In 2020 alone, there was a Rhodium deficit of about 84,000 ounces. The metal and its properties are the only ones able to reduce nitrogen oxide emissions and hence, help manufacturers comply with new strict regulations. The lack of supply and astronomically high price has caused large problems in the auto manufacturing industry. Although global demand for cars has risen, producers have been forced to scale down or eliminate production at certain plants due to this problem.
The Platinum, Palladium and Rhodium markets are largely linked to the auto industry for their ability to reduce greenhouse gas emissions. Investments in these metals are seen in the market as short-term rather than long term. With the rapid rise in EV production, funding and legislation, there will soon have no need for auto catalytic converters in vehicles and hence, a massive drop in demand for these 3 precious metals. In the short term, the metal will likely remain a key component in gasoline or diesel-powered vehicles for years to come.
As we had just started to see the light at the end of the COVID-19 tunnel, cases have risen globally, and we are back in a position of uncertainty. While some regions of the world are working their way out, others are seeing their situation worsen. There is no tell where the market will go.