Metals Weekly Round-Up: Gold Price Supported by Economic Woes

The gold price ticked higher early in the week, climbing above US$1,850 per ounce for the first time since late November. But as the US dollar strengthened and vaccines began to be administered and shipped, the yellow metal faced volatility.

Edging to a weekly high of US$1,872 on Tuesday (December 8), the metal shed 2.5 percent over the next 24 hours, but remained above the US$1,800 level to trade for US$1,825.

Gold climbed on Wednesday (December 9) as a US coronavirus relief package continued to be delayed.

The situation is becoming increasingly tense as many initial emergency aid programs are set to expire on December 26. “Market seems to have settled in a steady range. The key drivers (going forward) would be the size and scale of the US stimulus, the trajectory of the dollar, and inflation of course,” independent analyst Ross Norman told Reuters.

Despite the pressure that vaccine news has put on the gold price, Junior Stock Review’s Brian Leni believes gold is positioned to move higher.

“The gold market will move up and down as all markets do, but in my view we are unfortunately headed toward higher gold prices,” Leni told INN.

“My guess is that we have only seen the tip of the iceberg in terms of quantitative easing (QE), and I think that it is entirely possible that we see negative real rates in the future — truly frightening.”

At 9:46 a.m. EST on Friday (December 11), gold was valued at US$1,837.01.

After a steady uptick throughout November, December has added increased volatility to the silver price. The white metal started the first full week of the month trading at US$23.93 per ounce. A mid-week uptick sent the metal to a five day high of US$24.72.

Holding above US$23, silver is on track for one of its best performances in seven years.

“Metals Focus expects the silver price to rise by 27 percent year-over-year to average US$20.60 in 2020,” notes this year’s interim silver market review from the Silver Institute. “This would represent the highest annual average since 2013.”

Much of the white metal’s growth in 2020 is the result of the exchange-traded products (ETPs) space. As of mid-November, the silver ETP sector had recorded yearly inflows of 326 million ounces. The massive amount of buying pushed global ETP holdings to more than 1 billion ounces for the first time ever.

Silver was priced at US$23.91 at 9:55 a.m. EST on Friday.

Platinum and palladium also faced brief price dips this session. Platinum was trading for US$1,017 per ounce on Monday after surging to a year-to-date high of US$1,068 on December 4.

Palladium fell to US$2,152 per ounce mid-week, its lowest point since early November. A day later, a 5 percent uptick sent the price to a four week high.

At 10:11 a.m. EST on Friday, platinum was selling for US$1,008 and palladium was at US$2,217.50.

Copper continues to trade near its seven year high, climbing as high as US$7,712 per tonne. As economic hopes add headwinds for safe haven assets, the positive outlook is propelling the base metals.

“The US government is likely to unleash a new stimulus package soon, which will fuel a further surge of global liquidity into financial markets and copper,” Dan Smith of Commodity Market Analytics told INN.

“The EU is also looking at stimulus via increased infrastructure spending to boost renewable energy and power grids for electric vehicles.” On Friday morning, copper was trading for US$7,712.

Zinc was also on the up this week, adding 2.9 percent from Monday to end at US$2,810 per tonne.

Nickel prices surpassed their previous year-to-date high to sell for US$16,807 per tonne. Since January, the metal has added 19 percent to its value.

According to the International Nickel Study Group, global nickel demand is projected to come in at 2.52 million tonnes in 2021, up from 2.32 million tonnes this year.

Nickel was moving for US$16,807 on Friday.

Lead prices briefly rallied past US$2,100 per tonne this week before settling back just below that threshold. Lead ended the week valued at US$2,083.

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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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