Metals Weekly Round-Up: Gold Price Firms on New Stimulus Talks

After four weeks of declines, the gold price strengthened this week amid speculation that the US may pass a US$908 billion stimulus package before the new year.

Gold steadily retreated in November after positive news in the pharmaceutical sector regarding COVID-19 vaccines. The yellow metal’s climb coincides with a dramatic decrease in the value of the greenback.

The US Dollar Index slipped to its lowest point in two and half years this week, falling below 90.6.

Gold entered the first week of December trading at US$1,773 per ounce and had moved 3.4 percent higher by Friday (December 4).

“The market is now expecting higher world GDP growth in 2021, especially with the rolling out of the vaccine, which will create a risk-on environment,” Xiao Fu, a Bank of China international analyst, told Reuters on Friday. He also noted that a weak dollar, lax monetary policy and geopolitical tensions are factors supporting gold’s rising value.

Although Q4 has brought added headwinds for gold, there are catalysts pointing to higher prices in 2021.

Central banks have also begun purchasing gold again after becoming net sellers in August and September. “(Year-to-date) central bank net purchases continue to sit between 200-300 tonnes,” reads a report from the World Gold Council.

“Buyers have outnumbered sellers so far in 2020 (9 vs 8), with buying coming from several countries that mostly have relatively low ratios of gold-to-total reserves, demonstrating a continued appetite to grow gold holdings at a strategic level.”

Gold was trading for US$1,833.43 at 10:53 a.m. EST on Friday.

The silver price started December with momentum, surging 8 percent between Monday (November 30) and Tuesday (December 1). Adding another 1.9 percent to its value, the white metal topped out at US$24.26 per ounce after hours on Thursday (December 3).

2020 has been a breakout year for silver, which added as much as 57 percent to its price when it rocketed to US$28.32 in August. Pressure has pushed the white metal back, and it has held above US$22 since. At 11:18 a.m. EST on Friday, silver was moving for US$24.03.

After falling to an 18 year low of US$608 per ounce in March, platinum has climbed to a four year high.

The automotive metal broke the US$1,070 threshold as markets opened Friday. Since November, platinum has added 24.4 percent to its value, driven higher by production challenges out of South Africa.

Most significant are the output constraints that sector leader Anglo American (LSE:AAL) has experienced at its Anglo converter plant. Platinum was selling for US$1,046 at 11:56 a.m. EST on Friday.

While platinum has steadily trended higher during the first week in December, palladium has experienced volatility.

Stable growth in November was upended this week. Hitting US$2,295 per ounce on Tuesday, prices had tumbled 5 percent to US$2,162 by Thursday. The metal has since moved back above US$2,200.

At 12:19 p.m. EST on Friday, palladium was valued at US$2,224.

Copper continued its ascent into record territory this week, reaching a fresh seven year high on Friday. The red metal has added 14 percent to its value since early November and is still poised to climb higher.

“Copper’s price is now close to the intraday high of US$7,770 per tonne reached on March 11, 2013 and supported by a number of factors such as positive vaccine sentiment and rising oil prices,” states a Fastmarkets daily report.

As of Friday morning, copper was priced at US$7,767.

Zinc started the session strong, marking a year-to-date high of US$2,809 per tonne. Values fell back as the week progressed, but still maintained record levels. By week’s end, zinc was holding at US$2,747.

Nickel prices rose to a one year high in late November, driven higher by positive electric vehicle fundamentals. After climbing to US$16,373 per tonne, prices have slipped back below US$1,600 since the beginning of December.

On Friday morning, nickel prices were sitting in the US$15,937 range.

In the lead space, prices also faced headwinds this week. A month of growth in November brought prices to US$2,117.50 per tonne, a level unseen since mid-January. However, the higher threshold was unsustainable and the metal slipped back to US$2,046 at the end of the five day period.

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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.