Gold’s unexpected rally and freak firmness of the last several weeks may be coming to an end if price movements in recent trading sessions in London and New York are any indication. On Monday, gold prices fell by as much as $25 in the London market with PM Fix at $1,311 an ounce from the previous Friday’s $1,336/oz.

It is a significant decline from the six-month high of $1,388 reached a few days earlier. Clearly, easing tensions involving Ukraine and assertions by the US Fed chief have put paid to any hopes gold bulls may have nurtured. Latest CFTC data suggest that speculators were becoming over-extended. The Comex net speculative long positions had risen for the 12th consecutive week (as of March 18), taking it to the highest level since February 2013 when gold price was still well above $1,600/oz.

After it registered a record fall by mid-April last year to below $1,200/oz, several supportive factors extended a helping hand from time to time. Unabated liquidity, geopolitical concerns, weak global growth signals and weak dollar combined to help gold prices stay somewhat firm although from the fundamental side, physical demand conditions have not been exciting. Recently, haven demand retuned as events involving Russia in Ukraine and Chinese market concerns were supportive. ETF inflows turned positive for the third week in a row. All that may be changing now as the Fed willy-nilly applied downward pressure to gold with a hawkish statement. As widely expected, the FOMC tapered its asset purchase by a further $10 billion. Obviously, the widely expected dollar strength as a result of the hawkish FOMC statement and its own policy rate forecast presents an additional hurdle for gold. The recent strength in equity is another hurdle as less-committed speculators exit gold to move funds to equities.

Meanwhile, palladium price firmed to over $800/oz on Monday on the back of possible trade sanctions against Russia and slowing Russian shipments of the metal to Switzerland. Lower shipments from Russia would mean the palladium market may deliver a sizeable deficit this year.

On the demand side, two palladium-backed ETPs are expected to be launched in South Africa. Both these funds would be categorised as domestic investments for South African institutional investors. Up to 300,000 ounces of palladium could be sucked into the funds, according to observers.

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