Coffee futures surged to a 32-month high on speculation that persistent drought will curb next year’s harvest in Brazil, the world’s largest grower and exporter.
Dry weather was forecast for the next 10 days after no “meaningful” rain fell over the weekend in Brazil’s main growing regions, Drew Lerner, the president of World Weather Inc. in Overland Park, Kansas, said in a telephone interview. Arabica-coffee prices have almost doubled this year with crops parched since the start of the year.
With damage worsening before the start of spring in the Southern Hemisphere, Brazil’s National Coffee Council has estimated that farmers may collect less than 40 million bags in 2015, creating the longest output slump in five decades. Starbucks Corp. and J.M. Smucker Co. raised retail prices this year after futures surged 61 percent in the first quarter.
“Now, trading is all about the weather,” Fain Shaffer, the president of Infinity Trading Corp. in Indianapolis, said in an e-mail. “Since the chances of rain have been pushed back another week, we are seeing more premium being built into prices.” Arabica coffee for December delivery climbed 6.9 percent to settle at $2.208 a pound at 1:36 p.m. on ICE Futures U.S. in New York, the biggest gain for a most-active contract since April 22. Earlier, the price reached $2.255, the highest for a most-active contract since Jan. 20, 2012.
Flowers for the crop that blossomed from August to late September may fall off before developing further, Cepea, a University of Sao Paulo research group, said on Oct. 1.
‘Critical Period’
“It’s a critical period for the Brazilian arabica crop, which is flowering,” Tracey Allen, an analyst at Rabobank International in London, said in an e-mail. “Meaningful rain has not yet been received. Continuous rain is important during flowering to help the flowers develop into the fruit.”
Production this year may be down as much as 18 percent to 40.1 million bags, the National Coffee Council estimated, after a 3.1 percent slide last year. Today, coffee rose as Brazil’s real climbed the most since August 2013. President Dilma Rousseff faces a runoff election with Aecio Neves, who has appealed to investors by pledging to slow inflation. A stronger real erodes the appeal of export sales of the commodity priced in dollars.
Speculators “are particularly active, certainly from a currency point of view,” Rabobank’s Allen said.
Trading Jumps
Aggregate futures trading was 56 percent above the average for the past 100 days for this time, according to data compiled by Bloomberg. Bets on higher prices by money managers climbed 12 percent to 39,158 futures and options contracts as of Sept. 30, U.S. Commodity Futures Trading Commission data showed on Oct. 3.
Coffee has posted the biggest gain this year among 22 raw materials in the Bloomberg Commodity Index of 22 raw materials. The broad gauge dropped 5 percent in 2014.
Robusta coffee for November delivery rose 4.1 percent to $2,165 a metric ton on ICE Futures Europe in London. Earlier, the price reached $2,169, the highest since May 2. The commodity climbed 29 percent this year. The arabica premium to robusta was the highest since February 2012. The ratio has more than tripled this year. Arabica is brewed by specialty companies including Starbucks, while robusta beans are used in instant coffee.
Brazil is the biggest grower of arabica, and Vietnam is the top producer of robusta. A bag weighs 60 kilograms (132 pounds).
Brent Crude Pulled Higher by Rebound in Gasoline Futures
Brent and West Texas Intermediate rebounded after gasoline futures climbed on reports that units at Irving Oil Corp.’s Saint John, New Brunswick, refinery will be shut for unplanned repairs through Nov. 20.
The Canadian plant has the capacity to process 298,800 barrels a day of oil and exports over half of its refined products to the U.S. Northeast. The refinery will keep its largest fluid catalyst cracker closed, according to two people familiar with the repairs. WTI dropped as much as 1.1 percent and Brent by 1.2 percent earlier on signs that global production growth is outpacing demand. “Word of the extended shutdown at St. John sent gasoline higher and the other contracts followed,” Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “Gasoline supplies along the East Coast should tighten.”
November gasoline futures rose 1.52 cents, or 0.6 percent, to $2.3937 a gallon on the Nymex. Gasoline pump prices fell 0.8 cent to $3.289 a gallon nationwide yesterday, the least since Feb. 8, according to AAA, the largest U.S. motoring group.
WTI for November delivery increased 50 cents, or 0.6 percent, to $90.24 a barrel at 1:39 p.m. on the New York Mercantile Exchange. Futures slipped to $88.18 on Oct. 2, the lowest intraday price since April 23, 2013. Brent for November settlement rose 28 cents, or 0.3 percent, to $92.59 a barrel on the London-based ICE Futures Europe exchange. The contract touched $91.25, the lowest intraday price since June 28, 2012. It traded at a $2.35 premium to WTI, down from $2.57 Oct. 3.
Saudi Move
Brent fell 4.8 percent last week as Saudi Arabia cut some prices to Asia to the lowest in almost six years. OPEC, which supplies about 40 percent of the world’s oil, pumped 30.935 million barrels a day in September, the most since August last year, according to a Bloomberg survey of producers and analysts.
“The market still has to contend with a lack of demand and excess supply,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by phone. Ultra low sulfur diesel for November delivery fell 1.11 cents, or 0.4 percent, to $2.6052 a gallon. Futures touched $2.5921, the lowest level since June 29, 2012.
Hedge funds increased bets on rising U.S. oil prices just before they tumbled in the biggest weekly decline in two months. Money managers boosted net-long positions in WTI by 4.1 percent in the seven days ended Sept. 30. Long positions climbed 2.7 percent, U.S. Commodity Futures Trading Commission data show.
A weekly report detailing positions held in Brent crude and gasoil has been delayed “due to position reporting issues experienced by a member,” ICE Futures Europe said in a circular on its website.
Gold Rises From Lowest 2014 Price; Platinum at 5-Year Low
Gold futures rose from the lowest price this year as the dollar weakened, boosting the appeal of the metal as an alternative investment. The Bloomberg Dollar Spot Index retreated from a four-year high reached Oct. 3 as uneven U.S. labor-market data refuels a debate over when the Federal Reserve will raise interest rates. Gold futures posted a quarterly loss last month for the first time this year as the dollar index rallied 6.7 percent.
“The dollar drifting lower is adding support to gold,” Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen, said in a telephone interview. “Almost all of gold’s weakness we’ve seen has been a strong-dollar move.”
Gold futures for December delivery gained 0.8 percent to $1,202 an ounce by 11:54 a.m. on the Comex in New York after touching $1,183.30, the lowest since Dec. 31. Prices are headed for the biggest gain in two months.
Bullion jumped 70 percent from December 2008 to June 2011 as the Fed bought debt and held borrowing costs at an all-time low to bolster the economy. Policy makers are considering the timing for the first interest-rate increase since 2006 amid signs the U.S. economy is recovering. “Gold has held up relatively well compared to the other precious metals but, in our view, remains vulnerable,” Barclays Plc analysts including Suki Cooper said in an e-mailed note. Barclays expects the Fed to start increasing rates in June next year, “earlier than current market pricing of October 2015.”
Job Gains
The Bloomberg Dollar Spot Index capped a seventh straight weekly increase Oct. 3, the longest rally since June 2010, after a government report showed employers in the U.S. added more workers than forecast and the unemployment rate fell to the lowest since July 2008.
At the same time, the participation rate, which measures the number of Americans employed or looking for a job as a share of the working-age population, fell to the lowest since February 1978. Average hourly earnings were unchanged. China, which overtook India in 2013 to become the world’s largest consumer of gold, ends a week-long national holiday Oct. 8. Silver futures for December delivery gained 1.5 percent to $17.085 an ounce on the Comex. The metal fell 4.1 percent last week.
On the New York Mercantile Exchange, platinum futures for January delivery gained 1.6 percent to $1,246.20 an ounce. Prices dropped earlier to $1,186.5, the lowest since July 2009, amid concern that demand is slowing from Europe to China. Palladium futures for December delivery advanced 0.8 percent to $760.80 an ounce on the Nymex.
Platinum Falls Below $1,200 as Funds Slash Bullish Bets
Platinum slid below $1,200 an ounce for the first time in five years and money managers cut bullish bets by the most since 2012 on concern demand is slowing from Europe to China as the appeal of precious metals wanes.
Hedge funds and other speculators reduced their net-long position in New York platinum futures and options by 26 percent in the week ended Sept. 30, the most since May 2012, U.S. Commodity Futures Trading Commission data show. Speculators cut wagers on higher prices 70 percent from a record in July and are now the least bullish this year. The metal last traded little changed after falling as much as 2.8 percent earlier today.
Prices fell 12 percent last quarter after a five-month mine strike ended in June in top producer South Africa and on concern that slowing growth in China and Europe will curb demand for the metal used in catalytic converters and jewelry. Investors are losing faith in the commodity as an accelerating U.S. economy adds to the case for rising interest rates and strengthened the dollar. That curbs precious metals’ allure because they generally only offer returns through price gains.
“It’s a precious metal, so it’s getting the spillover from gold, and it’s an industrial metal,” Robin Bhar, an analyst at Societe Generale SA in London, said today by phone. “At this time that duality is its own worst enemy. The number of longs in the market was huge and there was always a risk that this sort of liquidation would happen.”
Platinum for immediate delivery rose 0.3 percent to $1,228.75 an ounce by 1:09 p.m. in London, after falling to $1,190.25 earlier today, the lowest since July 2009. Prices, which climbed to a 10-month high in July, are down 10 percent this year, set for the first back-to-back annual declines since 1997.
Factory Orders
German factory orders in August plunged the most since 2009, the Economy Ministry in Berlin said today, underlining the risk of a slowdown in Europe’s largest economy. Europe is the biggest user of platinum in catalytic converters that reduce harmful emissions, and the second-largest buyer of the metal overall, after China, according to Johnson Matthey Plc. The Asian nation is the top consumer of platinum jewelry.
European car sales grew at the slowest pace this year in August, the Brussels-based European Automobile Manufacturers’ Association said Sept. 17, while Oct. 1 data showed Japan’s auto sales declined 0.8 percent last month. In the U.S., autos have sold at a 16 million annualized rate or faster in each of the last seven months, data from Ward’s Automotive Group show.
China, which ends a week-long holiday Oct. 8, accounts for about 69 percent of global platinum jewelry demand, according to Johnson Matthey. The country’s platinum imports rose 59 percent in August, after four months of declines, government data show. Platinum’s drop and prices near that of gold may encourage more purchases, said Walter de Wet, head of commodities research at Standard Bank Group Ltd. in Johannesburg.
Platinum Buying
“It’s very difficult to call a bottom at the moment,” De Wet said today by phone. “We have to wait and see whether they start buying at these prices. We haven’t seen platinum at these levels for a while, so there should be some interest.” Gold for immediate delivery was 0.6 percent higher today at $1,198.51 an ounce in London. Platinum has typically been more expensive than gold. An ounce of platinum bought as few as 1.0015 ounces of gold today, the least since April 2013. The 10-year average is 1.45.
Investors own 84.2 metric tons of platinum through exchange-traded products, data compiled by Bloomberg show. Holdings are at the lowest since May and 5.3 percent below the July 23 record. That compares with gold-backed holdings that are at a five-year low and 36 percent below the 2012 peak.
Mine Strike
Mineworkers who downed tools over pay from January to June in South Africa deepened a third successive shortage. Usage will outpace demand by 1.8 million ounces this year, before narrowing to 433,000 ounces in 2015, according to Barclays Plc, which sees prices averaging $1,451 next year. Still, fundamentals are “essentially a worthless indicator right now,” UBS AG wrote in an Oct. 2 note.
While more than 1 million ounces were lost due to the South African strike, price rallies were capped because “abundant” inventories ensured supply, Barclays wrote in a Sept. 17 report. Above-ground stockpiles may total about 5 million ounces, Societe Generale’s Bhar said. De Wet pegs the amount held, including in ETPs and by producers and users, at about 12 million ounces by the end of last year.
A strengthening U.S. economy as European policy makers resort to more monetary stimulus to stoke growth helped push the Bloomberg Dollar Spot Index to a four-year high last week. Gold, which slid 28 percent last year, erased its 2014 gains last week and is trading 38 percent below a record set in September 2011.
Gold Correlation
Platinum’s 30-week correlation coefficient to gold is at 0.67, with a reading of 1 signaling the two moved lockstep in the same direction. The link between the metals, at the highest in a month, increased from 0.53 in April 2013.
The U.S. Mint, which resumed production of platinum coins in March after a six-year halt, has sold 16,700 ounces this year, data on its website show. In contrast, it has sold 384,000 ounces of American Eagle gold coins. Gold sales totaled 856,500 ounces last year. The U.S. economy will grow 2.1 percent this year and 3 percent in 2015, economist estimates compiled by Bloomberg show. The euro area will expand 0.8 percent in 2014, after two years of contraction, while China’s growth will slow to 7.3 percent this year and 7 percent in 2015, the lowest levels since 1990.
“Platinum’s very exposed to the European car market and data from the euro zone has been pretty terrible with barely any growth,” Societe Generale’s Bhar said. “There are worries that China is slowing more than the government would like. Above-ground stocks seem to be pretty adequate. It’s going to take a few more years of more physical deficits to bring those stocks down.”
source: Bloomberg
Dry weather was forecast for the next 10 days after no “meaningful” rain fell over the weekend in Brazil’s main growing regions, Drew Lerner, the president of World Weather Inc. in Overland Park, Kansas, said in a telephone interview. Arabica-coffee prices have almost doubled this year with crops parched since the start of the year.
With damage worsening before the start of spring in the Southern Hemisphere, Brazil’s National Coffee Council has estimated that farmers may collect less than 40 million bags in 2015, creating the longest output slump in five decades. Starbucks Corp. and J.M. Smucker Co. raised retail prices this year after futures surged 61 percent in the first quarter.
“Now, trading is all about the weather,” Fain Shaffer, the president of Infinity Trading Corp. in Indianapolis, said in an e-mail. “Since the chances of rain have been pushed back another week, we are seeing more premium being built into prices.” Arabica coffee for December delivery climbed 6.9 percent to settle at $2.208 a pound at 1:36 p.m. on ICE Futures U.S. in New York, the biggest gain for a most-active contract since April 22. Earlier, the price reached $2.255, the highest for a most-active contract since Jan. 20, 2012.
Flowers for the crop that blossomed from August to late September may fall off before developing further, Cepea, a University of Sao Paulo research group, said on Oct. 1.
‘Critical Period’
“It’s a critical period for the Brazilian arabica crop, which is flowering,” Tracey Allen, an analyst at Rabobank International in London, said in an e-mail. “Meaningful rain has not yet been received. Continuous rain is important during flowering to help the flowers develop into the fruit.”
Production this year may be down as much as 18 percent to 40.1 million bags, the National Coffee Council estimated, after a 3.1 percent slide last year. Today, coffee rose as Brazil’s real climbed the most since August 2013. President Dilma Rousseff faces a runoff election with Aecio Neves, who has appealed to investors by pledging to slow inflation. A stronger real erodes the appeal of export sales of the commodity priced in dollars.
Speculators “are particularly active, certainly from a currency point of view,” Rabobank’s Allen said.
Trading Jumps
Aggregate futures trading was 56 percent above the average for the past 100 days for this time, according to data compiled by Bloomberg. Bets on higher prices by money managers climbed 12 percent to 39,158 futures and options contracts as of Sept. 30, U.S. Commodity Futures Trading Commission data showed on Oct. 3.
Coffee has posted the biggest gain this year among 22 raw materials in the Bloomberg Commodity Index of 22 raw materials. The broad gauge dropped 5 percent in 2014.
Robusta coffee for November delivery rose 4.1 percent to $2,165 a metric ton on ICE Futures Europe in London. Earlier, the price reached $2,169, the highest since May 2. The commodity climbed 29 percent this year. The arabica premium to robusta was the highest since February 2012. The ratio has more than tripled this year. Arabica is brewed by specialty companies including Starbucks, while robusta beans are used in instant coffee.
Brazil is the biggest grower of arabica, and Vietnam is the top producer of robusta. A bag weighs 60 kilograms (132 pounds).
Brent Crude Pulled Higher by Rebound in Gasoline Futures
Brent and West Texas Intermediate rebounded after gasoline futures climbed on reports that units at Irving Oil Corp.’s Saint John, New Brunswick, refinery will be shut for unplanned repairs through Nov. 20.
The Canadian plant has the capacity to process 298,800 barrels a day of oil and exports over half of its refined products to the U.S. Northeast. The refinery will keep its largest fluid catalyst cracker closed, according to two people familiar with the repairs. WTI dropped as much as 1.1 percent and Brent by 1.2 percent earlier on signs that global production growth is outpacing demand. “Word of the extended shutdown at St. John sent gasoline higher and the other contracts followed,” Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “Gasoline supplies along the East Coast should tighten.”
November gasoline futures rose 1.52 cents, or 0.6 percent, to $2.3937 a gallon on the Nymex. Gasoline pump prices fell 0.8 cent to $3.289 a gallon nationwide yesterday, the least since Feb. 8, according to AAA, the largest U.S. motoring group.
WTI for November delivery increased 50 cents, or 0.6 percent, to $90.24 a barrel at 1:39 p.m. on the New York Mercantile Exchange. Futures slipped to $88.18 on Oct. 2, the lowest intraday price since April 23, 2013. Brent for November settlement rose 28 cents, or 0.3 percent, to $92.59 a barrel on the London-based ICE Futures Europe exchange. The contract touched $91.25, the lowest intraday price since June 28, 2012. It traded at a $2.35 premium to WTI, down from $2.57 Oct. 3.
Saudi Move
Brent fell 4.8 percent last week as Saudi Arabia cut some prices to Asia to the lowest in almost six years. OPEC, which supplies about 40 percent of the world’s oil, pumped 30.935 million barrels a day in September, the most since August last year, according to a Bloomberg survey of producers and analysts.
“The market still has to contend with a lack of demand and excess supply,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by phone. Ultra low sulfur diesel for November delivery fell 1.11 cents, or 0.4 percent, to $2.6052 a gallon. Futures touched $2.5921, the lowest level since June 29, 2012.
Hedge funds increased bets on rising U.S. oil prices just before they tumbled in the biggest weekly decline in two months. Money managers boosted net-long positions in WTI by 4.1 percent in the seven days ended Sept. 30. Long positions climbed 2.7 percent, U.S. Commodity Futures Trading Commission data show.
A weekly report detailing positions held in Brent crude and gasoil has been delayed “due to position reporting issues experienced by a member,” ICE Futures Europe said in a circular on its website.
Gold Rises From Lowest 2014 Price; Platinum at 5-Year Low
Gold futures rose from the lowest price this year as the dollar weakened, boosting the appeal of the metal as an alternative investment. The Bloomberg Dollar Spot Index retreated from a four-year high reached Oct. 3 as uneven U.S. labor-market data refuels a debate over when the Federal Reserve will raise interest rates. Gold futures posted a quarterly loss last month for the first time this year as the dollar index rallied 6.7 percent.
“The dollar drifting lower is adding support to gold,” Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen, said in a telephone interview. “Almost all of gold’s weakness we’ve seen has been a strong-dollar move.”
Gold futures for December delivery gained 0.8 percent to $1,202 an ounce by 11:54 a.m. on the Comex in New York after touching $1,183.30, the lowest since Dec. 31. Prices are headed for the biggest gain in two months.
Bullion jumped 70 percent from December 2008 to June 2011 as the Fed bought debt and held borrowing costs at an all-time low to bolster the economy. Policy makers are considering the timing for the first interest-rate increase since 2006 amid signs the U.S. economy is recovering. “Gold has held up relatively well compared to the other precious metals but, in our view, remains vulnerable,” Barclays Plc analysts including Suki Cooper said in an e-mailed note. Barclays expects the Fed to start increasing rates in June next year, “earlier than current market pricing of October 2015.”
Job Gains
The Bloomberg Dollar Spot Index capped a seventh straight weekly increase Oct. 3, the longest rally since June 2010, after a government report showed employers in the U.S. added more workers than forecast and the unemployment rate fell to the lowest since July 2008.
At the same time, the participation rate, which measures the number of Americans employed or looking for a job as a share of the working-age population, fell to the lowest since February 1978. Average hourly earnings were unchanged. China, which overtook India in 2013 to become the world’s largest consumer of gold, ends a week-long national holiday Oct. 8. Silver futures for December delivery gained 1.5 percent to $17.085 an ounce on the Comex. The metal fell 4.1 percent last week.
On the New York Mercantile Exchange, platinum futures for January delivery gained 1.6 percent to $1,246.20 an ounce. Prices dropped earlier to $1,186.5, the lowest since July 2009, amid concern that demand is slowing from Europe to China. Palladium futures for December delivery advanced 0.8 percent to $760.80 an ounce on the Nymex.
Platinum Falls Below $1,200 as Funds Slash Bullish Bets
Platinum slid below $1,200 an ounce for the first time in five years and money managers cut bullish bets by the most since 2012 on concern demand is slowing from Europe to China as the appeal of precious metals wanes.
Hedge funds and other speculators reduced their net-long position in New York platinum futures and options by 26 percent in the week ended Sept. 30, the most since May 2012, U.S. Commodity Futures Trading Commission data show. Speculators cut wagers on higher prices 70 percent from a record in July and are now the least bullish this year. The metal last traded little changed after falling as much as 2.8 percent earlier today.
Prices fell 12 percent last quarter after a five-month mine strike ended in June in top producer South Africa and on concern that slowing growth in China and Europe will curb demand for the metal used in catalytic converters and jewelry. Investors are losing faith in the commodity as an accelerating U.S. economy adds to the case for rising interest rates and strengthened the dollar. That curbs precious metals’ allure because they generally only offer returns through price gains.
“It’s a precious metal, so it’s getting the spillover from gold, and it’s an industrial metal,” Robin Bhar, an analyst at Societe Generale SA in London, said today by phone. “At this time that duality is its own worst enemy. The number of longs in the market was huge and there was always a risk that this sort of liquidation would happen.”
Platinum for immediate delivery rose 0.3 percent to $1,228.75 an ounce by 1:09 p.m. in London, after falling to $1,190.25 earlier today, the lowest since July 2009. Prices, which climbed to a 10-month high in July, are down 10 percent this year, set for the first back-to-back annual declines since 1997.
Factory Orders
German factory orders in August plunged the most since 2009, the Economy Ministry in Berlin said today, underlining the risk of a slowdown in Europe’s largest economy. Europe is the biggest user of platinum in catalytic converters that reduce harmful emissions, and the second-largest buyer of the metal overall, after China, according to Johnson Matthey Plc. The Asian nation is the top consumer of platinum jewelry.
European car sales grew at the slowest pace this year in August, the Brussels-based European Automobile Manufacturers’ Association said Sept. 17, while Oct. 1 data showed Japan’s auto sales declined 0.8 percent last month. In the U.S., autos have sold at a 16 million annualized rate or faster in each of the last seven months, data from Ward’s Automotive Group show.
China, which ends a week-long holiday Oct. 8, accounts for about 69 percent of global platinum jewelry demand, according to Johnson Matthey. The country’s platinum imports rose 59 percent in August, after four months of declines, government data show. Platinum’s drop and prices near that of gold may encourage more purchases, said Walter de Wet, head of commodities research at Standard Bank Group Ltd. in Johannesburg.
Platinum Buying
“It’s very difficult to call a bottom at the moment,” De Wet said today by phone. “We have to wait and see whether they start buying at these prices. We haven’t seen platinum at these levels for a while, so there should be some interest.” Gold for immediate delivery was 0.6 percent higher today at $1,198.51 an ounce in London. Platinum has typically been more expensive than gold. An ounce of platinum bought as few as 1.0015 ounces of gold today, the least since April 2013. The 10-year average is 1.45.
Investors own 84.2 metric tons of platinum through exchange-traded products, data compiled by Bloomberg show. Holdings are at the lowest since May and 5.3 percent below the July 23 record. That compares with gold-backed holdings that are at a five-year low and 36 percent below the 2012 peak.
Mine Strike
Mineworkers who downed tools over pay from January to June in South Africa deepened a third successive shortage. Usage will outpace demand by 1.8 million ounces this year, before narrowing to 433,000 ounces in 2015, according to Barclays Plc, which sees prices averaging $1,451 next year. Still, fundamentals are “essentially a worthless indicator right now,” UBS AG wrote in an Oct. 2 note.
While more than 1 million ounces were lost due to the South African strike, price rallies were capped because “abundant” inventories ensured supply, Barclays wrote in a Sept. 17 report. Above-ground stockpiles may total about 5 million ounces, Societe Generale’s Bhar said. De Wet pegs the amount held, including in ETPs and by producers and users, at about 12 million ounces by the end of last year.
A strengthening U.S. economy as European policy makers resort to more monetary stimulus to stoke growth helped push the Bloomberg Dollar Spot Index to a four-year high last week. Gold, which slid 28 percent last year, erased its 2014 gains last week and is trading 38 percent below a record set in September 2011.
Gold Correlation
Platinum’s 30-week correlation coefficient to gold is at 0.67, with a reading of 1 signaling the two moved lockstep in the same direction. The link between the metals, at the highest in a month, increased from 0.53 in April 2013.
The U.S. Mint, which resumed production of platinum coins in March after a six-year halt, has sold 16,700 ounces this year, data on its website show. In contrast, it has sold 384,000 ounces of American Eagle gold coins. Gold sales totaled 856,500 ounces last year. The U.S. economy will grow 2.1 percent this year and 3 percent in 2015, economist estimates compiled by Bloomberg show. The euro area will expand 0.8 percent in 2014, after two years of contraction, while China’s growth will slow to 7.3 percent this year and 7 percent in 2015, the lowest levels since 1990.
“Platinum’s very exposed to the European car market and data from the euro zone has been pretty terrible with barely any growth,” Societe Generale’s Bhar said. “There are worries that China is slowing more than the government would like. Above-ground stocks seem to be pretty adequate. It’s going to take a few more years of more physical deficits to bring those stocks down.”
source: Bloomberg