Gold will range between $1,165 and $1,245 per ounce this month, based on currency variables, INTL FCStone said in its monthly report.
The spot gold price was last at $1,211/1,212, an increase of $9 on the previous close. Yesterday, the gold price jumped to $1,224.40, the highest since February 17.
“We think that the Iranian framework agreement reached recently, a likely resolution to the Greek issue and weaker macro numbers out of the US, should weaken the dollar short-term and further boost gold,” it said in the report.
On the flip side, oil prices, which have been correlating quite strongly with gold recently, could generate a downward impact.
“So will the belief that the Federal Reserve is still intent on raising rates and may dispel notions to the contrary, despite last week’s weaker payrolls report, meaning that any dollar sell-off will be limited,” the broker said.
Last Friday, the US Bureau of Labor Statistics reported that total nonfarm payroll employment increased by just 126,000 in March, which was well below the 247,000 forecast.
“A wild card is the equity markets – most international markets continue to push higher and if the US market regroups and pushes up as well on a ‘reassessment’ of Fed rate policy, the pressure on gold could intensify.”
As for silver, the broker believes it should do better in April “as we do see a slightly more vibrant gold complex given the weaker dollar.”
It expects to see a $16.20-$17.75 trading range for the metal, which was last largely unchanged from the previous close at $16.85/16.90.
Platinum will trade between $1,100 and $1,200 over the course of this month – it was last at $1,165/1,170, an increase of $16.
On the supply side, the World Platinum Investment Council expects the market to be in a deficit of 235,000 ounces in 2015, but the shortfall is 66 percent lower than 2014 levels because of higher mining output and increased recycling.
As well, overall jewellery sales are expected to be flat this year, as a well-publicized crackdown on corruption in China is affecting jewellery demand negatively. Chinese jewellery demand typically accounts for some two percent of global consumption. But rising demand from the US may help offset part of this sluggishness, as wholesalers take advantage of platinum’s lower price, relative to gold.
Meanwhile, European auto sales remain strong – latest data shows registrations in February increasing seven percent year-on-year to hit their highest rate in 11 months, but sales are not expected to come back to pre-crisis levels for years to come.
Palladium will trade between $690 and $790 in April – it was last at $773/778, up $28.
“While investment demand for palladium is on the retreat, fabrication demand remains strong,” the report said.
US automakers reported that March sales rebounded to an annualized rate of 17.15 million vehicles from a rate of 16.2 million in February. Meanwhile, Chinese auto sales fell 0.2 percent year-on-year to 1.59 million in February compared with an increase of 7.6 percent in January and 12.9 percent in December.
“The Lunar New Year holidays had a lot to do with the February slump, but even accounting for this, we think the three-month rate of decline is quite significant.”
Meanwhile, Russia’s central bank has officially agreed to sell most of its palladium stock to a fund of investors led by Norilsk Nickel and two co-owners.
“It is unclear what Norilsk is going to do with the metal, but we suspect that this uncertainty may have been another reason palladium could not get much of a bid last month, as any release into the physical market would help ease the structural deficit,” the broker said.
(Editing by Martin Hayes)
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