Metals Weekly Round-Up: Dim Data Crushes Market Optimism

Surging 2.8 percent this week off renewed COVID-19 concerns and weak economic data from the US, gold is on track for its largest weekly gain since the first week of April.

Dismal data from the World Bank forecasting a 5.2 percent global contraction in the wake of the pandemic saw support when the US Federal Reserve projected a 6.5 percent decline in the US economy.

Another 1.5 million jobless claims in the US last week sent markets into a tailspin on Thursday (June 11) as investors pulled back on optimism seen earlier in the month.

The flurry of news sent gold as high as US$1,744 per ounce, but it then slid back to US$1,724 in pre-trading hours on Friday (June 12).

Despite the recent price volatility, the yellow metal is the lone resource expected to climb in 2020, according to the World Bank’s report.

“Prices are anticipated to decline 16 percent in 2020 before showing a modest increase in 2021. This forecast is predicated on a recovery of Chinese demand, which accounts for around 50 percent of the consumption of base metals,” it reads.

Calling this the worst recession since World War II, the international monetary group warned that a second round of COVID-19 lockdowns could lead to an even greater decline (8 percent) and prevent a forecasted 2021 recovery.

Midway through the week, US Federal Reserve Chair Jerome Powell promised to counter the prolonged economic impact of coronavirus with continued stimulus, “using our full range of tools to support the economy in this challenging time.”

During an interview with the Investing News Network (INN), Byron King touched on the insurmountable level of US debt and his expectations for gold and the dollar.

Watch the interview above for King’s full thoughts on debt, the US dollar and gold.

“Looking forward, I see the dollar in trouble. I see debt overwhelming the governments, businesses, individuals. Gold is one measure of how to preserve your wealth through the times to come,” said the editor of the Whiskey & Gunpowder newsletter at Agora Financial.

An ounce of gold was trading for US$1,742.27 at 10:20 a.m. EDT on Friday.

Silver also experienced uncertainty-related price growth early in the session, moving above US$18.15 per ounce. But safe haven demand was unable to hold the metal at US$18.10, and it fell back mid-week.

A brief uptick on Thursday had silver testing US$18 again, before dipping as low as US$17.46 after hours.

As of 10:27 a.m. EDT on Friday, silver was valued at US$17.70.

Following a steady decline in May, platinum prices edged to a four week high on Wednesday (June 10). The metal’s climb to US$830 per ounce mid-week has been attributed to growing interest in platinum exchange-traded funds (ETFs).

A recent five day stretch of consecutive inflows added 37,400 ounces of platinum to ETF holdings.

Broad market pressure Thursday sent the platinum price below US$800 for the first time since June 5. Platinum was selling for US$807 at 10:42 a.m. EDT on Friday.

Palladium fell to US$1,824 per ounce as markets dipped late in the week, its weakest since May 15. It continues to await a resurgence in automotive demand, which is expected to slowly increase in the weeks to come.

At 11:01 a.m. EDT on Friday, palladium was moving for US$1,869.

Base metals bore the brunt of the volatility, with all but copper ending the week lower.

Copper was bolstered this session from China’s renewed industrial demand, a key factor for the growth of the base metals market.

Entering the period at US$5,659 per tonne, the red metal climbed to US$5,680 on Wednesday and held.

Addressing Chinese demand as well as the other factors and catalysts for copper, Eleni Joannides, Wood Mackenzie’s principal analyst, spoke to INN.

“Additional support has come in the form of ongoing supply disruptions, tightness in scrap availability and cautious optimism about a demand-led recovery as economies have started to scale back containment measures,” she said.

Copper was trading for US$5,801.50 on Friday.

Slipping back from its Monday price of US$2,095 per tonne to hold at US$2,003.50, zinc was unable to make gains this session.

Stagnated demand for the metal has kept prices low, although a 23,000 tonne shipment of zinc to the London Metal Exchange this week is offering promise.

Speculation that a restart in the US auto sector could lead to an increase in demand for zinc and lead may be beneficial for prices in the near term. Zinc was selling for US$2,003.50 on Friday.

Nickel also fell off from its early week high of US$12,943 per tonne as continued drags on demand prevented growth.

Electric vehicle adoption initiatives in Europe may be a potential catalyst for nickel down the road, despite the sector remaining flat currently.

EV growth will put pressure on nickel sulfide companies, as the demand for the material from the electric vehicle battery space increases. Nickel was valued at US$12,615 as of 12:01 p.m. EDT.

Lead was also impacted by the fall in optimism and by fears a second wave of COVID-19 could again shutter economies.

Slipping 1.5 percent this week, lead will face continued headwinds if industrial demand isn’t able to steadily climb in the months ahead.

At 12:05 p.m. EDT on Friday, lead was trading for US$1,711 per tonne.

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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.