The price of platinum and palladium dropped over 5% on Tuesday (Nov. 23). Platinum lost 5.43% at 11:16 am ET, selling for $960.09 per ounce, while palladium fell by 5.86% at the same time, going for $1,844.78 per ounce.
A general fall in prices of precious metals comes as the US dollar rallied following Federal Reserve Chairman Jerome Powell’s reappointment, a sign the central bank will continue its tightening plans.
Powell, who was nominated by former President Donald Trump, took office as Fed Chair in February 2018. His current term was due to end in February 2022.
If Fed Governor Lael Brainard had been nominated for the top Fed position, many expected more dovish monetary policy.
A note from Capital Economics suggested the president chose Powell due to concerns ushering Brainard’s nomination through the Senate would have been more difficult.
Traders now are betting Powell will step up the pace at which the Fed is normalizing monetary policy to help fight soaring inflation.
The risk, then, is one of a continual spiral upwards, whereby wages increase to keep up with the rising cost of a broadening scope of consumer goods, which in turn means prices continue to increase to cover operating costs. This prospect could send show waves through the US consumer base.
U.S. consumer prices this month posted their biggest annual gain in 31 years, driven by surges in the cost of gasoline and other goods.
Investors also ramped up their bets on an European Central Bank (ECB) rate hike next year after ECB policymaker Francois Villeroy de Galhau, said on Monday that the Frankfurt-based institution is “serious” about ending its emergency bond-buying program in March and may not need to expand regular asset purchases to cover the shortfall.
Separately, board member Isabel Schnabel said on Tuesday that the risks to inflation are skewed to the upside and that plans to end pandemic emergency bond buys remain valid.
Elsewhere, Chalice Mining made its best platinum discovery in Western Australia’s Gonneville deposit, with official estimates of a USD 3 billion pre-revenue market capitalization. On the corporate front, Northam Platinum Holdings announced a ZAR 17 billion deal to secure a one-third stake in Royal Bafokeng Platinum.