Metals Weekly Round-Up: Gold Price Dips to 9 Month Low

Gold continued to face headwinds this week, spending time below US$1,700 per ounce.

Following four weeks of steady declines, which resulted in a US$1,681 value late on Monday (March 8), the price was able to rally mid-week, rising 3.46 percent to sell for US$1,739.10.

Stronger US bond yields paired with a rising US dollar have worked against the precious metal since late February, when its price dropped from US$1,804.

Despite its gold’s current performance, EB Tucker, director of Metalla Royalty & Streaming (TSXV:MTA,NYSEAMERICAN,MTA) and Nova Royalty (TSXV:NOVR,OTC Pink:NVARF), is urging investors to think long term when it comes to the metal.

“This is the time when all the fundamentals for gold are great, and people are scratching their head as to what’s going on,” Tucker told the Investing News Network.

Watch Tucker discuss the gold market as well as other metals.

“This is a huge, once-in-a-generation bull market — huge. This is a huge, huge commodities cycle bull market, and you’re hung up on guessing the price of an ounce of gold?”

Gold was trading for US$1,702.24 at 10:13 a.m. EST on Friday.

The silver price displayed more resilience than gold this week, adding 4.8 percent by Thursday (March 11) afternoon. However, values have since fallen back below the US$26 per ounce level.

Concerns that US stimulus will entice investors to riskier assets weighed on the precious metals during the last trading day of the week. But fears about inflation continue to add underlying support to the sector. At 10:19 a.m. EST on Friday, silver was priced at US$25.58.

Reversing two weeks of losses, platinum peaked at US$1,218 per ounce this week. Platinum is anticipated to outperform gold and palladium in 2021, according to CPM Group’s Rohit Savant.

“We have on an annual average basis gold and palladium prices rising 5 percent in 2021 over 2020 levels,” Savant said during this year’s Prospectors & Developers of Canada Convention (PDAC). “However, we have silver and platinum prices rising roughly 30 percent on an annual average basis.”

This growth will be a result of the positive fundamentals both metals offer. That said, Savant did note that the entire precious metals space will benefit from economic recovery and quantitative easing.

Platinum was priced at US$1,177 on Friday, while palladium was selling for US$2,268 per ounce.

The base metals space started the year strong, with prices surging and most metals marking multi-year highs. Values have fallen lower since late February.

“The pullbacks have been quite varied across the base metals on the LME, but for the most part prices seem to be consolidating, with lead and nickel looking the weakest and tin rebounding the most,” reads a note released on Friday by Metal Bulletin.

Copper rose to an eight year high of US$9,614.50 per tonne in late February, but has since fallen lower. Demand and economic growth are anticipated to be price catalysts for the metal this year. Last year, global refined copper use contracted 3.3 percent, a trend that is expected to be reversed in 2021.

Vanessa Davidson, director of base metals research at CRU Group, expects global demand to increase by 5.2 percent. During a presentation at PDAC, she pointed to the supply gap that will arise in the sector in the coming years. This deficit will be driven by the limited amount of new copper projects.

This will ultimately serve as a catalyst to higher prices, but there will be periods of volatility, which will see London Metal Exchnge copper prices peak this year and decline next.

“Our expectation is that prices will average US$3.36 per pound, or US$7,400 per tonne, in 2025,” said Davidson. Copper sat at US$9,062 on Friday morning.

Nickel prices neared the US$20,000 a tonne level in February, which was a seven year high, then dropped more than 18 percent to fall below US$16,000 a short time later.

The space will battle headwinds as the world’s primary nickel producer, Tsingshan, will supply nickel matte derived from converted nickel pig iron from its Indonesian operations to two Chinese companies.

The nickel will then be processed to make battery-grade nickel sulfate, an application that previously called for high grade nickel ore, according to Roskill.

“The news has already sent shockwaves through the nickel market, with the three-month LME nickel price declining by over 8.5 percent on 4 March to US$15,945,” reads a report from the firm. “This brought an abrupt end to the strong rise in prices that have taken place since April last year, with the nickel price reaching a 6-year high just a few weeks earlier.”

A tonne of nickel was valued at US$16,434 on Friday.

Zinc made a modest gain this session, rising from US$2,742.50 per tonne on Monday to US$2,784 to end the week. Meanwhile, lead shed US$48.50 over the five day period to sit at US$1,934.50 per tonne.

The second quarter will be a crucial period for the sector.

“The market is wary that all the extra stimulus will be inflationary and whether that will force central banks to tighten monetary policy sooner rather than later,” the Metal Bulletin overview states.

“For the metals, inflation should be supportive as indeed should the stimulus spending, so if equity markets avoid a sell-off then the overall bull market may have further to run.”

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.