Metals Weekly Round-Up: Weak US Dollar Pushes Gold Higher

After starting the week at US$1,832 an ounce, the gold price rallied strongly, climbing as high as US$1,893.20 by Thursday (December 17).

An uptick in value for the US dollar weighed the yellow metal down on Friday (December 18), pulling it further away from the US$1,900 threshold.

The rest of the precious metals also climbed higher over the five day period; however, palladium was unable to sustain the US$2,200 per ounce level, slipping below the mark twice before rising back.

Following a month of declines, gold reached a 30 day high this session. But some of its momentum was lost late in the week as the US greenback pulled away from its year-to-date low.

“What you’re seeing in terms of the gold markets today is a little bit of dollar strength after a very poor week for the US dollar and a very good week for gold,” Michael Hewson, chief market analyst at CMC Markets UK, told Reuters on Friday.

Gold trended lower throughout November as optimism around vaccines increased. Some of that thinking was reversed this week as positive cases of COVID-19 increased rapidly around the globe.

Adrian Day of Adrian Day Asset Management spoke to the Investing News Network (INN) about the impact the various vaccines could have on the price of gold.

“In and of itself, this is a negative influence on central bank willingness to pump excess liquidity into the system,” he said. “But many questions remain: The testing period for the vaccine has been dramatically shortened to months rather than years, so there may be longer-term negative affects we do not yet know about; there are many who will be cautious of being a ‘guinea pig’ and will want to wait.”

Day went on to note, “Even a successful rollout will not cause the economy globally to return to pre-COVID levels immediately, and regardless of aggregate numbers there will be pockets — sectors, geographies — still severely struggling.”

Gold was priced at US$1,887.15 as of 9:29 a.m. EST on Friday.

The silver price also spent the majority of the week climbing higher, holding above US$23 per ounce. Year-to-date, the white metal has added 43 percent to its value. Silver’s ability to rise amid market chaos was recently highlighted by US Global Investors’ (NASDAQ:GROW) Ralph Aldis.

“When you’re dealing with a real bull market in precious metals, silver’s typically at three times the price move to gold,” Aldis told INN. “That’s fairly common because of reduced opportunity to actually invest in silver, that just keeps it that more volatile.”

The dual metal’s ability to outperform its sister metal gold was also a topic of conversation during an interview with Resource Maven Gwen Preston and Peter Krauth. The duo are teaming up to publish a silver-focused newsletter.

Listen to Gwen Preston and Peter Krauth make the case for silver investment.

“If you look at how silver performed this year, from say the March bottom to the August peak, we were looking at something like a 140 percent return in silver versus gold‘s 38 percent return,” said Krauth. “Thirty-eight percent versus 140 (percent) shows you how silver can clearly easily outperform gold in rallies and in longer-term bull markets.”

Silver was trading for US$25.77 at 10:38 a.m. EST on Friday.

Platinum rose to a year-to-date high this week, breaching the US$1,040 per ounce level. The price for the precious metal has been edging higher since mid-November.

As mentioned, palladium experienced volatility throughout the session. Pushed as high as US$2,243 on Tuesday (December 15), it fell as low as US$2,166 on Wednesday (December 16). By week’s end, the autocatalyst metal had regained some lost ground to hold above US$2,200.

Friday morning saw platinum selling for US$1,032, and palladium was sitting at US$2,224.

Economic recovery hopes continued to propel copper higher this week. The red metal surpassed its previous year-to-date high to rally to US$7,893 per tonne late in the period.

Analysts remain optimistic that the base metal will benefit from the widespread vaccine rollout.

“Although vaccines will not resolve the pandemic in Q1, we expect the encouraging vaccine news to provide a boost to confidence and spending in Europe and the US, which has led us to raise our economic growth forecasts in the first quarter of 2021,” Charlie Durant of CRU Group told INN.

Copper was holding in the US$7,900 range on Friday morning.

Zinc also hit a year-to-date high this week. Since dipping to a low of US$1,773.50 per tonne in March, the zinc price has surged back 60 percent. As of Friday morning, zinc was valued at US$2,841.50.

The rally continued for nickel as well, and it pushed to a year-to-date high on Monday of US$17,594 per tonne. The metal pulled back a day later, but was able to end the week holding at US$17,520 on Friday.

Following a year of excess supply, Roskill forecasts that the market will remain in surplus in 2021, although it is expected to be significantly smaller than the surplus expected in 2020. Benchmark Mineral Intelligence is also expecting a surplus next year, while Woodmac is expecting a balanced market.

Unlike the other base metals, lead faced price pressure this week. Values hit a five day high on Wednesday of US$2,062 per tonne and have since pulled back. Lead was valued at US$2,046 on Friday.

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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.