Commodity prices traded narrowly in European session as investors got few hints regarding central banks' monetary stance in coming months.
Gold continued to fluctuate around 1600. In the near-term, we do not see much breakthrough without fresh news of further easing from the Fed and the ECB.
Fundamentals are indeed putting downward pressures on the yellow metal as demand slipped amid worries over global economic slowdown and sovereign debt problems in the Eurozone. Platinum continued to consolidate around 1400.
Recent violence in South African miners might after production but the impact would not be significant enough to reverse the surplus situation in the Platinum sector.
Gold-to-platinum ratio continued to climb higher to uncharted territory as substitution in auto-catalysts and economic contraction in Europe have hurt Platinum demand. With above-ground stocks staying at all-time high, the noble metal is expected to record surplus for the 8th straight year.
The latest news about miners is the violence in Lonmin's platinum mines in South Africa. This followed conflict between unions at Impala's operation mines. Violence and strike will lead to supply disruption. It is expected that the incident would cause a drop of 80 to 100K oz of output in Lonmin's mines.
If the situation spread to other miners, the loss might increase to 200K oz. The decline in production is not expected to affect the demand-supply balance for the year much. That is because Platinum price may be lifted higher in recent days, the medium-term outlook would remain weak.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.