Metals Weekly Round-Up: Gold Price Holds on Rate Hike Fears

Gold maintained gains made at the beginning of May to sit above US$1,800 per ounce this week.

A drop in the US dollar pushed the yellow metal to the US$1,840 range before concerns over rising inflation and a potential interest rate increase muted gains.

Despite performing flatly this week, gold has climbed 6.6 percent since March 1, when it was trading for US$1,724.80. It remains down from where it began the new year.

Looking to the future, Ed Moy, chief market strategist at Valaurum, believes this year gold could rise as much as 14 percent to reach the US$2,000 to US$2,100 range.

“Even though the spot price is well below that, to me the real price of gold is what the market is willing to pay for it — and they’re willing to pay up to US$2,100,” said the former director of the US Mint.

Listen to Moy discuss gold’s performance fundamentals above.

Concerns over inflation are expected to add tailwinds to gold’s performance through May.

The value of gold was sitting at US$1,839.16 at 10:15 a.m. EDT on Friday (May 14).

The price of silver neared US$28 per ounce to start the session, then retreated to US$26.75 on Thursday (May 13). Though the metal seems to have set a bottom in the US$26 range, CPM Group believes the metal could dip to US$23 before a significant uptick is locked in.

Jeffery Christian, director at CPM Group, anticipates the white metal could break US$30 by year’s end.

“We wouldn’t be surprised to see the price go back up and test US$30 or US$32 over the next several months,” he said during a recent silver webinar.

Christian went on to note, “(Longer term) we think that it will accelerate and probably blow past the record prices around US$50 that we saw in 1980 and then again in 2011.”

At 10:32 a.m. EDT on Friday, silver was priced at US$27.37.

Platinum rose to a 60 day high of US$1,269 per ounce early on Monday (May 10), then dipped to US$1,198 on Thursday. By Friday’s bell, it had clawed back 2 percent to sit above US$1,200.

For its part, palladium opened the five day session with a fresh all-time high of US$2,908 per ounce. The value proved unsustainable and it fell back to the US$2,726 level on Thursday.

As of 10:43 a.m. EDT on Friday, platinum was selling for US$1,212. At the same time, palladium was trading for US$2,790.

The base metals space faced declines across the board, with copper shedding US$471. The red metal reached another fresh all-time high this week, but has pulled back to the US$10,253 per tonne level.

“The downturn in the metals looks concerted as a correction gets under way,” a Friday note from Fastmarkets reads. “The metals have looked overdue a correction for some time now, so we should now get an update on how bullish underlying sentiment really is, by seeing how far prices pull back and how long they stay down.” On Friday morning, copper was valued at US$10,253.50.

Zinc values made the second largest decline over the period, dropping 4.8 percent. Late Thursday saw prices trend slightly higher into the US$2,990 per tonne range, where they continue to hold.

Nickel was also on the decline mid-week, but according to Fastmarkets, the correction may be fleeting.

“The fact bargain hunting has emerged into equities after only a few days of weakness, may mean the dip in the metals prices may also be short-lived,” states the firm. “But there have been signs that China’s economy has been putting the brakes on for some time, with bank lending being reined in and copper premiums falling and at low levels, which may lead to a deeper correction.”

Early Friday, nickel was priced at US$17,180 per tonne.

Lastly, lead ended the week lower than its Monday start of US$2,228.50 per tonne. Lead and zinc prices are expected to remain muted as 2020’s surplus is anticipated to carry over this year.

Lead ended the week priced at US$2,116.

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

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