PALLADIUM DETHRONES GOLD TO BECOME THE MOST VALUABLE PRECIOUS METAL
It was a historic day for the metal industry after palladium dethroned gold to become the most valuable precious metal. It reached an intraday high of $1253. Gold is now trading at $1240. Palladium has continued its winning streak after being the best performing metal in 2017. The reason for the rally is increased demand in the automobile industry as Europe moves from diesel cars to gasoline cars. China is also adopting the Euro 6 emissions standards by 2020, which has increased its demand. Another catalyst for the surge is the reduced supply in Russia and South Africa. The reduced demand for diesel cars has caused palladium’s closest peer – platinum – to fall in price with an ounce selling at $800.
The sterling remained subdued today as traders continued receiving important information on Brexit. The government through the attorney general published the legal advice on Brexit. This came a day after it was found in contempt of parliament. The document warned that the controversial backstop plan will last indefinitely until negotiations between UK and EU take place. The backstop is a measure which means that there will be a UK-wide customs union with the EU. If the country tries to exit the backstop the document warned that there will be ‘protracted and repeating’ rounds of negotiations. At the same time, trade secretary Liam Fox warned the parliamentarians against voting in opposition to the Chequers plan. On economic data, the services PMI declined to the lowest level since the Brexit vote.
The euro was little moved today even with the positive data from the European Union. In Spain, the Spanish services PMI rose to 54, which was better than the consensus estimate of 53.7. In Italy, the services PMI rose to 50.3, after contracting in October. In Germany, the composite PMI rose to 52.3, which was better than the estimated 52.2. The overall EU27 services and composite PMI was 53.4 and 52.7 respectively. Retail sales for the region increased by 0.3%, which was better than the estimated 0.2%. On an annualized basis, it rose by 1.7% after rising by just 0.3% in September.
The EUR/USD pair fell overnight to the lower line of the symmetrical triangle that has been forming. Today, it rose slightly after the positive data from the EU. This consolidation is an indication that the pair will have a breakout, which could happen after the US jobs numbers are released. The current price of 1.1353 is along the middle line of the Bollinger Bands. The other key indicators such as moving averages, MACD, and RSI are all in a neutral level.
Palladium continued rallying today and reached an all-time high of $1250. Since October this year, the price has jumped by more than 50%. On the daily chart below, the price is above all the major moving averages. The RSI is currently at 72, which is still lower from where it was in October. As the most precious metal, there is a likelihood that more money will now move from gold, which will push its price higher.
The GBP/USD pair remained at multi-year lows as investors continued to weigh the multiple reports on Brexit. Overnight, the pair declined to the lowest level since 2017. The pair is now trading at 1.2764, which is along the 25-day EMA and lower than the 50-day EMA. As a result of the recent price action, the RSI has continued to move along the 50 level. The pair is likely to continue moving like this until Friday when traders will receive the important US jobs numbers. Next up, traders will wait for Tuesday when the UK parliament will vote on Brexit.