Metals Weekly Round-Up: Gold Price Pullback Prompts Dip Buying

The gold price slumped this week, dipping below US$1,900 per ounce for the first time in eight weeks. It shed as much as 3.1 percent, largely due to a rebounding US dollar.

The American greenback is on track for its best performance since April, and that has weighed on the yellow metal’s safe haven appeal. The strong US currency is also dragging on the precious metals as a whole, and all of them were in the red on Friday (September 25) morning.

The base metals did not fare any better, with that sector experiencing a marked decline as well.

Gold has sat flat for most of September, but spent the last full week of the month trending lower, even dropping as low as US$1,850 midway through the period. Analysts have attributed the decline to risk-aversion sentiment working against the yellow metal.

The price drop led to some dip buying, helping the metal hold above US$1,850 on Friday.

Speaking with the Investing News Network in early September, Mercenary Geologist Mickey Fulp pointed out that gold’s run-up past US$2,060 was unsustainable.

“(Gold has) a base at US$1,800. If it goes below US$1,900 for any length of time, (it) is probably going to US$1,800, because you look at a chart, and there’s no resistance below its current level all the way down to US$1,800,” he said. “And (it has) a really, really strong base at US$1,720, plus or minus. So it has a lot of downside risk right now.”

As of 11:00 a.m. EDT on Friday, gold was trading for US$1,863.44.

The silver price began falling early on Monday (September 21) and has faced little resistance in its decline. Opening the session at US$26.02 per ounce, a 15 percent drop brought the white metal down as far as US$21.89, its lowest point since mid-July.

Like its sister metal gold, silver spent the latter half of August and the early September trading flatly. Locked at the US$27 level, the metal made its sharpest decline this week.

Silver later saw a small uptick to the US$23 range, and on Friday at 11:14 a.m. EDT it was at US$22.93.

After slowly edging higher throughout September, platinum was challenged during the last full session of the month. The pressure prompted the metal to slip below US$900 per ounce.

Despite the recent value drop, the World Platinum Investment Council (WPIC) still anticipates investor interest in the metal.

“At a time of very low interest rates, and in light of the stimulus programmes many authorities have undertaken to support national economies, platinum offers similar safe haven characteristics to gold, providing a hedge against the risk of inflation and currency devaluation,” reads a recent WPIC note.

Platinum was changing hands for US$845 at 11:25 a.m. EDT on Friday

The palladium price also lost some recent gains when the metal pulled back from its three week high of US$2,251 per ounce early on Monday.

Although the other precious metals benefited from dip buying, palladium was unable to gain momentum on Thursday (September 24), and fell to the lowest point for the week on Friday morning. At 11:31 a.m. EDT that day, palladium was moving for US$2,091.

Copper prices sank this week as reality began to set in on the markets. It fell 4.3 percent from its Monday value of US$6,837 per tonne on the back of a volatile broad-based selloff in US equities.

By week’s end, copper was holding at US$6,538.50 as buying pressure began to re-emerge.

Headwinds also pushed nickel lower. But despite its late September selloff, the metal was able to hold above US$14,000 per tonne, ending the session at US$14,179.

Zinc also ended the week 4 percent lower, dragged down by a slump in demand.

Despite the widespread slip, analysts are expecting the inflationary tone set across economies globally to translate to higher prices for all commodities. On Friday, zinc was priced at US$2,379.50 per tonne.

Lead experienced the most modest decline this period, falling from US$1,871.50 per tonne to US$1,856 by Friday. However, lead has been on a downtrend for most of September.

After approaching year-to-date high territory early in the month at US$1,984, prices continuously fell and hit US$1,856 this week.

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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.