Gold extended the rally last week after breaking above important
resistance at 1640. The dovish FOMC minutes for the August meeting
raised speculations of QE3. As the meeting was held before release of
the July employment report, we believe the next trigger point would be
the August report (due September 7), together with the Beige book and
Fed Chairman Ben Bernanke’s Jackson Hole address on August 31. However,
while it’s likely that further monetary measures would be announced in
September, the tool might not necessary be QE3. Judging from the tone in
the minutes, policymakers might choose to change the language guidance
at that meeting.
Platinum price has rallied more than $150/oz since August 15 as
violence at Lonmin mines has raised concerns over production suspension.
The spread between gold and platinum has since narrowed. However, it’s
uneasy for platinum to regain its premium over gold like 2011 and
before. It is because the production losses in Impala and Aquarius
Platinum, Eastern Platinum and Lonmin, while evidenced the risks posed
by labor actions in South Africa on production, are likely to remove the
surplus (supply> demand) in the platinum market in 2012.
