Metals Weekly Round-Up: Stimulus Gridlock Weighs on Gold

Facing headwinds this week, the gold price was on track for its first week of losses since mid-September. Concern that a US stimulus package won’t get approved ahead of the November election has stalled investor appetite for the yellow metal.

Volatility was felt across the sector, with the other precious metals also in the red on Friday (October 16) morning. October has been challenging for the sector after Q3 saw each metal move significantly higher.

The Q4 pressure was also felt in the base metals space, with the broader sector experiencing volatility.

Starting the period holding above US$1,900 per ounce, gold dipped dramatically on Tuesday (October 13), falling to US$1,890.60. The slip prompted speculation about liquidation in the gold space in response the again delayed stimulus package.

Prices climbed north of US$1,900 again on Thursday (October 15), and despite the October slump, Lobo Tiggre of Independent Speculator sees upside for the yellow metal in the months ahead.

“Negative real rates are a main driver, and they aren’t going away any time soon,” he told INN. “Fiscal policy is also a huge push, and that’s going to continue as well, no matter who wins the election.”

And the US isn’t the only country facing challenges related to economic activity and stimulus.

“Don’t forget that other central banks and countries are doing similarly, so that even if the US dollar doesn’t fall as much as many expect in the foreign exchange markets, that doesn’t mean that it (and other currencies) aren’t losing value,” he said. “Currency debasement worldwide is good for all real assets in general, and particularly for monetary metals.”

At 9:56 a.m. EDT on Friday, gold was priced at US$1,905.71.

After holding above US$25 per ounce for four days, silver was on a downward trend this week, falling below US$24 on Thursday. The white metal’s duality did not work in its favor this session, and it was dragged lower by its currency correlation as well as its industrial side.

Silver’s nature as a leveraged play on gold has been reflected in record-setting growth in silver exchange-traded products (ETPs).

“Global silver ETP holdings rose by 297 million ounces through the third quarter of this year, nearly tripling the growth in the comparable period last year,” reads a note from the Silver Institute.

The first three quarters of 2019 saw ETPs add 103 million ounces, while the same period in 2020 saw 297 million ounces of inflows.

At 10:23 a.m. EDT on Friday, silver was valued at US$24.49.

This week was also challenging for platinum, which had been trending higher since early October. The automotive metal was pushed down to US$833 per ounce on Thursday, its lowest since September 21.

Early Friday, prices were edging higher and holding above US$850. Platinum was trading for US$870 at 10:29 a.m. EDT on Friday.

Three weeks of gains also came to an end for palladium, which shed 6.5 percent by Friday morning. The catalyst metal soared to a six month high of US$2,372 per ounce on October 9, but fell to US$2,205 on Tuesday (October 13). Palladium was selling for US$2,215 as of 10:41 a.m. EDT on Friday.

Copper slipped late in the week, hitting US$6,683.50 per tonne. Since October 2, the red metal has added a little over 4 percent to its value, but remains off its September 21 year-to-date high of US$6,837.

According to Fastmarkets, weaker demand may dampen some of the seasonal appetite traditionally seen in the space. “Usually, Chinese seasonal demand for copper peaks in October, when buyers pick up tonnages, but major imports during the summer months have led to a stock overhang and minimal demand for imports,” reads a report from the firm.

Copper was selling for US$6,683.50 on Friday.

Zinc also saw a year-to-date high in September, hitting US$2,554 per tonne, but has since shed some of that value, holding in the US$2,400 range. By Friday, zinc was on the decline following a strong early week showing. It was moving for US$2,397 to end the week.

Nickel spent the second full week of October in the green. A mid-week slip saw it dip to US$15,105 per tonne; however, a quick rebound on Thursday pushed the metal back above US$15,350.

The positive performance is nickel’s second best this year — on September 1, the base metal reached a year-to-date high of US$15,660. On Friday, nickel was valued at US$15,353.

Lead fell below US$1,800 per tonne this week, unable to the retain gains it had made since reaching a 10 week low in early October. Lead was holding at US$1,754 to end the 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.