Investors turn even more negative on PMs

Over the past month, precious metal (PM) prices have dropped sharply. Gold has fared better than its peers, as lingering risks in Europe have cushioned the price from further losses. Both the technical outlook and investor sentiment have substantially deteriorated since mid-May, with the potential for further price falls in the short-term. However, given the current low level of speculative positioning and the fact that prices have already fallen sharply, we believe that the upside potential for prices far exceeds the downside risk. Overall, we remain positive on the outlook for prices of all four of the main precious metals but expect the more “industrial” PMs to outperform this year.