Metals Weekly Round-Up: Gold Price Lower as US Election Nears

Base Metals Investing
Base Metals Investing

The gold price battled October headwinds this week, falling below US$1,880 per ounce for the first time in four weeks.

Gold battled headwinds this week, falling below US$1,880 per ounce for the first time in four weeks. The US dollar rallied briefly, but was reversing course by Friday (October 30).

Uncertainty around the approaching US election paired with a rise in global COVID-19 cases weighed on investor sentiment, aiding in a late-week ascent for the yellow metal.

The broader precious and base metals sectors also faced declines in the last week of the month, with palladium and nickel experiencing the largest decreases at 9 percent and 2.6 percent, respectively.

Gold started the week holding just above US$1,900, edging as high as US$1,909 on Tuesday (October 27). But by Wednesday (October 28), a stronger US dollar index had added pressure, sending the price plummeting to US$1,872. And that wasn’t the end to the currency metal’s woes — the greenback’s move then forced gold even lower, to US$1,863.

Despite the recent dip, most analysts expect gold to regain steam. Gerardo Del Real of Digest Publishing sees the drop in value as a realignment and opening.

“I see this pullback as a healthy opportunity for people that felt like they missed that initial run-up to maybe start doing some homework and some due diligence and get in and take advantage of the recent pullback,” he said. “Because I don’t think it’ll last for more than another four to six weeks.”

Watch Del Real discuss the gold sector and junior plays above.

Gold was priced at US$1,879 as of 10:35 a.m. EDT on Friday.

The silver price shed as much as 7.3 percent this week, dropping as low as US$23.02 per ounce for the first time since September 21. Volatility across equity markets added pressure to the dual metal, which was weighed down by both its currency and industrial correlations.

The white metal stands to benefit from infrastructure, stimulus and energy projects post-election, although it is likely to face headwinds until after the November 3 vote.

Silver was trading for US$23.40 an ounce at 10:45 a.m. EDT on Friday.

Platinum also fell lower this week, losing 3.9 percent after edging to US$879 per ounce.

Sluggish Q3 automotive sales and lingering supply chain challenges have depressed platinum prices, as well as prices for its metal sister palladium. Although Q3 auto sales rose 38 percent from the previous quarter, they are still down 10 percent year-over-year.

Palladium was the precious metal facing the largest declines this period, dropping 9 percent. It sunk from US$2,264 on Tuesday to US$2,057 by early Friday.

Platinum was valued at US$840 and palladium was selling for US$2,091 as of 10:59 a.m. EDT on Friday.

After reaching a year-to-date high of US$6,953 on October 21, copper has pulled back by 3.7 percent. Although the dip has lowered prices, the copper outlook remains optimistic.

A recovery in China, which makes up the bulk of copper demand, looming supply shortages stemming from lockdowns in Peru and Chile and a weak US dollar are all potential catalysts for copper prices down the road. Copper was moving for US$6,692 per tonne on Friday morning.

Zinc also experienced volatility for the last trading week of October. Like copper, zinc reached a year-to-date high of US$2,565 per tonne late in the month, then fell back.

Prices remain above US$2,500, but according to analysts at the International Lead and Zinc Study Group (ILZSG), volatility could be ahead for both zinc and lead.

2020 is anticipated to bring a 5.3 percent fall in zinc demand, and a 6.5 percent decline for lead. Some of that is expected to be offset by output drops from top-producing nations Bolivia, Peru and Mexico.

Zinc mine production is forecast to be down 4.4 percent, with a 4.7 percent decrease for lead. However, these two metals have also experienced severe supply disruptions as well.

“A resumption to pre-pandemic production levels is proving to be a challenging process at a number of major mining operations,” the ILZSG told Reuters.

Zinc was priced at US$2,503 on Friday, while lead was trading for US$1,801 per tonne.

Nickel spent the early part of the week edging higher to sit at US$15,819 per tonne on Wednesday. A day later, a dramatic drop sent prices to US$15,393, a 2.6 percent decline.

The reversal is linked to a market correction after the metal marked its year-to-date high of US$16,064 on October 21. Nickel’s October rally has been attributed to a recovery in the stainless steel market, and that could help keep prices above US$15,000 into next year.

On Friday morning, nickel was valued at US$15,393.

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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.

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