Metals Weekly Round-Up: Strong US Dollar Stalls Gold

The gold price fell below US$1,900 per ounce on Friday (January 8), ending three weeks of gains.

A strengthening US dollar and 10 year Treasury yield gains weighed on the precious metal’s ascent. Gold hit a five day high of US$1,956 per ounce ahead of the failed takeover of the US Capitol building.

Gold also faced downward pressure from the rising value of bitcoin, which set a new all-time high of US$41,000 during the first full week of 2021.

Demand for the digital currency has skyrocketed this year, climbing 39 percent since January 1, while gold has declined 2 percent in the same period.

The rush to cryptocurrency could signal bitcoin’s emergence as the safe haven asset of choice for a younger generation, according to JPMorgan (NYSE:JPM).

“Bitcoin’s competition with gold has already started in our mind,” strategists at the bank noted.

US$7 billion in outflows from gold and US$3 billion worth of inflows into the Grayscale Bitcoin Trust (OTCQX:GBTC) were cited as evidence of the shift.

“Considering how big the financial investment into gold is, a crowding out of gold as an ‘alternative’ currency implies big upside for bitcoin over the long term,” the bank told Reuters.

Gold was valued at US$1,863.88 as of 11:01 a.m. EST on Friday.

Silver was on track to end the week in the red after experiencing volatility mid-week. Values hit a five day high of US$27.79 per ounce in pre-trading hours on Wednesday before sliding back sharply.

The decline continued on Thursday (January 7), with silver dipping below US$26. Friday morning saw the white metal sitting at US$25.81.

Spiking to a four year high, platinum prices moved north of US$1,100 per ounce early in the week. The precious metal traded within the US$1,050 to US$1,100 range for the rest of the period. Platinum was selling for US$1,067 at 11:18 a.m. EST on Friday.

Palladium rallied to a 10 month high on Tuesday (January 5) of US$2,394 per ounce. It trended lower for the rest of session, falling as low as US$2,226. At 11:19 a.m. EST on Friday, palladium was at US$2,247.

As the broad precious metals sector faced volatility late in the week, base metals performed positively, backed by optimism over potential infrastructure development in the US. A resurgence in demand has helped metals in the sector recovery early 2020 loses over the last six months.

Copper prices continued their bull run, marking an eight year high of US$8,129.50 per tonne on Wednesday. News that the Democrats will gain control of the US Senate, mixed with speculation that President-elect Joe Biden will issue more stimulus, benefited base metals.

The red metal continued its ascent, registering a new high on Friday morning of US$8,208.50.

Zinc has also made a strong showing for 2021, surging 5.8 percent over the first eight days of the year. Friday morning saw zinc trading for US$2,882 per tonne.

Nickel prices also spiked during the first full week of 2021, starting the period at US$17,344 per tonne and soaring to US$1,805 by Friday. The 3.3 percent uptick has been attributed to heightened buying following an earthquake in Indonesia.

The Asian country is the global leader in nickel output, with output topping 800,000 metric tons in 2019.

Lead prices hit a five day high mid-week before retreating. Still holding above US$2,000 a tonne, analysts believe battery demand in western countries experiencing winter could be a price catalyst for the metal over the coming weeks.

“It’s quite feasible that the extraordinary volume of replacement battery demand created after lockdown this summer means that many more vehicles are going into this winter with newer, stronger batteries,” Farid Ahmed of Wood Mackenzie told the Investing News Network.

“Without some really harsh weather to cause battery failures, lead recyclers may not get the usual volumes of scrap batteries needed to feed their furnaces as battery makers continue to clamor for refined lead.” Lead was priced at US$2,028 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.