1. Newsroom
  2. Precious metals outlook: strong case for palladium
Menu
UBP in the press 28.01.2019

Precious metals outlook: strong case for palladium

Precious metals outlook: strong case for palladium

Finanz und Wirtschaft (26.01.2019) - Gold prices have been supported by safe-haven demand. The as yet unresolved tariff dispute between the US and China and its negative impact on global growth is one factor giving investors the jitters. The elevated equity market volatility is another. And the Brexit confusion, the US government’s partial shutdown and the protracted social unrest in France are adding to the uncertainty.


The Fed’s intention to ease back on the pace of its policy tightening for the year in response to the macro data and financial market signals has also raised gold’s appeal.

The IMF’s lowering of its global growth outlook for 2019 for the second time in three months reflects the slowdown that is starting to take hold across the world. The new forecast is 3.5%, down from the previous estimate of 3.7%, due in large part to slow growth in the eurozone and emerging markets, in particular China, where GDP growth recently came in at its lowest since the great financial crisis of 2009.

Even though the recently firmer equity markets have put a lid on gold prices, we believe gold will continue to go up, at least until the trade dispute between the US and China is settled. We believe that ongoing political and economic pressures will prompt the two sides at least to sow the seeds of an agreement. This would help the Chinese economy, but also Donald Trump, who will soon begin campaigning for re-election and is running out of levers to strengthen the economy (more tax cuts are unlikely). Even though China has agreed to ramp up its imports from the US, the intellectual property and technology transfer questions remains unsettled for the time being.

Even if an agreement is reached in the trade dispute, the US debt ceiling debate will reignite soon in the US as the current debt limit will be reached by 1 March. That debate promises to be as heated as the wrangling over the government shutdown, and a solution will be difficult to reach. In this context, gold prices could well remain positive for the months to come, holding up around the USD 1,300 mark.

As for other PGMs, palladium was by far the strongest commodity in 2018. It was supported by higher demand from China where vehicle emission standards are stricter. Another factor was the fear that US sanctions on Russia would weigh on exports as Russia remains the world’s main producer and exporter of palladium. The metal remains our favourite PGM for 2019, even though we acknowledge the possibility of some price stabilisation (back towards the USD 1,000 level). Platinum prices, on the other hand, were hurt but the shrinking market share of diesel cars. Silver was the worst-performing precious metal in 2018, its price particularly affected by the weaker Chinese yuan and Indian rupee, and we doubt that the trend has bottomed out.

UBP Investment Expertises

Nevine_Pollini_150x150.jpg

Névine Pollini
Equity Analyst Advisory Services

Most read

UBP in the press 18.10.2018

Tech sector driven by innovation

Sphere (10.2018) - Since the 2008-09 global financial crisis, the global technology sector has delivered an impressive annual return of 15.4%, easily outpacing global equities as a whole (10.2%).

UBP in the press 26.09.2018

Asset TV Fund Selector: Fixed Income

What does the end of quantitative easing mean for bond investors? What should be the right exposure to emerging bond markets and why are active managers better equipped than passive ones to handle the return of volatility? Mohammed Kazmi, Portfolio Manager & Macro-Strategist Global and Absolute Return Fixed Income at UBP, recently participated in an Asset TV broadcast outlining the risk and reward trade-offs in fixed-income markets over the next six to twelve months.

UBP in the press 28.09.2018

AI will benefit Swiss banks

Bilan (25.09.2018) - “If I had to bet on which would be the leading professions in the years to come, Swiss bankers would be on the list!” This prediction by Laurent Alexandre, the founder of the Doctissimo.fr website, may come as a surprise to some.


Further reading

UBP in the press 21.02.2019

Making the most of open architecture

Fund Selector Middle East (18.02.2019) - Dubai expansion plans as Swiss-owned family firm’s asset management arm wins mandates.

UBP in the press 20.02.2019

Convertibles’ options continue to be the main attraction of the asset class

Funds Magazine (02.2019) - “Generally, European convertibles have become highly defensive. The risks in investing in this asset class are therefore limited, as economic growth is still relatively solid and the outlook is decent for companies.”

UBP in the press 19.02.2019

The soft-landing scenario is looking more credible

Le Temps (18.02.2019) - According to popular belief in China, the year that has just begun – the Year of the Pig – is likely to be a good one for the financial sector because the pig is a symbol of prosperity.