Despite continued industrial action at Northam Platinum, PGM prices remained allied to the gold price early on. The prospect of widespread strike action at the three largest miners, coupled with the Fed’s announcement to begin tapering in January 2014, enabled PGM prices to decouple from gold later in December, ending the month on an upward trajectory while the yellow metal continued to flounder.
PGM prices were initially boosted by South African supply concerns but on the whole continued to react more to monetary policy than supply-demand fundamentals. Although the workforce at Northam Platinum was on strike for almost the entire month, the spectre of QE tapering once again spooked the gold market, driving down the gold price and undermining other precious metals prices too.
After weakening at the start of October in line with a declining gold price, PGM prices were relatively stable until political stalemate in the USA over the debt ceiling was resolved on the 15th. After a Chinese ratings agency downgraded the US credit rating two days later the dollar went into a tailspin and gold and the major PGM prices rose sharply as a result. As US government offices resumed operations, the delayed release of economic data proved to be bearish for the dollar. Consequently, the gold price strengthened, consolidating above the $1,340 level, and pgm prices were well supported too. Concern over the possibility of widespread strikes in South Africa over wages bolstered prices further but they remained vulnerable to negative investor sentiment towards gold, easing at the end of the month as a result.
Early support for platinum and palladium prices came from the Syrian crisis and the start of a pay strike on the South African gold mines by members of the NUM. The platinum price was then largely governed by a falling gold price, which suffered from a slight easing of international tensions over Syria, and speculator anticipation of perhaps a more hawkish monetary stance from the US Federal Reserve. Gold and platinum prices recovered sharply but briefly on the 18th as Ben Bernanke said that monetary easing would continue, while palladium received a more durable boost from the assumption that low interest rates would further stimulate autocatalyst demand. Despite the onset of a strike at Anglo Platinum over job cuts, the platinum price weakened after pro-tapering comments in the USA and growing concern over a US government shutdown due to a stalemate between Congress and the Administration over raising America's debt ceiling.
Platinum and palladium prices continued on July's rising trend for most of August, influenced by ongoing concerns about supply disruption in South Africa as wage negotiations in the platinum mines approached. A stronger gold price, partly in response to dollar weakness and partly due to the developing pressure for some form of intervention in the Syrian conflict, gave further support. Rebuilding of investor positions after the lows of early July demonstrated a broadly bullish attitude to the PGM, with net longs on NYMEX for both platinum and palladium reaching the highest since the beginning of April.
Platinum bounced off a 45-month low of $1,312 on the last day of June to hit $1,382 on 2nd July, prompted by a mix of short covering, the Asian buying that typically follows any sharp dip in the platinum price and news of a wage demand by the AMCU union at Anglo Platinum. Countering this support later in the week was the signing by mining companies, government and most union organisations (but not AMCU) of the conciliatory framework agreement for sustainable mining, in which the parties agreed to co-operate in addressing a range of mining sector problems, including violence and intimidation, and to work within the legal framework to resolve labour disputes. Dollar strength generated by better than expected results for US factory orders and vehicle sales plus statements by both the European Central Bank and the Bank of England that interest rates would likely remain low for some time to come caused a surge in equity prices and a slump in the Euro and sterling versus the dollar, resulting in a move down for platinum to the month's low of $1,332 on 8th July.
The overriding influence on PGM prices in June was the impact on investor sentiment of the US Federal Reserve's statements on the 19th about the future of quantitative easing (QE). Interpreted as signalling the end of the bond purchasing programme in the USA which had done much to support investment in precious metals, gold was quickly sold off, causing a parallel decline in the prices of platinum and palladium. Simultaneously there was an easing of fears - at least for the time being - that industrial action would disrupt platinum mining operations in South Africa. With weak auto sales in Europe and worries about a slowdown in Chinese economic growth, there was little to change the negative mindset of investors towards the precious metals.
May witnessed a divergence in the price trends of platinum and palladium. Although supported by negative news from the South African mining sector and the release of Johnson Matthey’s “Platinum 2013” review showing the platinum market in deficit last year, weakness in the gold price undermined platinum’s attempts to convincingly break and hold above technical resistance at $1,500. Palladium was also affected by gold’s volatility, but less so than platinum, and received positive attention from investors on the back of JM’s confirmation of a substantial shortfall in palladium supply in 2012.
Despite the news of a strike at Northam Platinum, platinum and palladium prices in April were weakened by heavy selling of gold positions in mid-month. 400 tonnes of gold were sold on the COMEX futures market, drastically impacting the pgm complex and triggering many sell orders on the way down. PGM prices recovered to some extent, supported by increasing investment in exchange traded funds, with platinum benefitting from the launch of an ETF by Absa bank in South Africa.
In a somewhat unsettled month, pgm prices were initially supported by supply concerns from southern Africa and good economic indicators from the USA. There was a sharp fall in both metals on the 20th as a result of technical trading moves arising from the banking crisis in Cyprus, which caused a divergence between gold and pgm prices. Platinum and palladium picked up strength in the final week of March after Russia and South Africa were reported to be discussing some form of co-ordinated marketing strategy for pgms.
Platinum and palladium prices in the first half of February continued to draw strength from concerns about supply. Dollar strength in relation to sterling and the euro weakened the gold price but the well-publicised problems in the South African mining industry and increasing tensions in Zimbabwe enabled pgm initially to resist the downward pressure. The sell-off in gold eventually weighed on prices, resulting in a sharp decline for both platinum and palladium from which platinum failed to recover; palladium, however, continued to get support from positive investor sentiment.
The pgm complex had spent most of December 2012 on the defensive in the face of year-end liquidation and the impending US "fiscal cliff" that, by automatically invoking spending cuts and tax increases, threatened to tip the USA into recession. After a last-minute deal was reached over the New Year which postponed the issue, markets breathed more easily, the dollar weakened and precious metals prices rose. Momentum increased prior to the release by Anglo Platinum of its long-awaited restructuring plans, and once the news was out that the major producer was proposing a significant cut in production capacity, the JM Base Price for platinum soared to a high for the month of $1702, in the process losing its discount to gold. The JM palladium price also increased on the news and was further strengthened by media reports of a diminishing Russian state stockpile.