Metals Weekly Round-Up: Election Delay Provides Tailwinds for Gold
The presidential uncertainty has benefited the broader resource sector, with precious and base metals on track to end the week significantly higher than they were on Monday.
Gold edged toward US$1,960 per ounce on Friday (November 6) as the US election tally dragged into its fourth day. In search of safe havens, investors kept the yellow metal well above US$1,900.
A poor showing from the US dollar, which recorded its worst week since March, also aided gold’s ascent.
By Friday, gold had added an impressive 3.6 percent to its value since opening on Monday at US$1,889. The potential for a contested election added volatility to markets, with the Dow Jones Industrial Average (INDEXDJX:.DJI) slipping 158 points on Friday.
It’s expected that monetary policy from the winning party will be a catalyst for gold’s further climb.
According to the World Gold Council, “the combination of a high-risk, low-rate environment is expected to maintain gold investment demand for the foreseeable future. As such, investors should prepare for ongoing high volatility as market conditions adjust to emerging developments.”
Whether the yellow metal will enter record-setting territory again this year remains unknown, but Frank Holmes, CEO and chief investment officer at US Global Investors (NASDAQ:GROW), thinks US$2,000 is in sight in the short term. Longer term, he believes a price of US$4,000 is possible.
Watch INN’s latest interview with Holmes above.
At 10:13 a.m. EST on Friday, gold was valued at US$1,942.30.
Silver also trended higher starting on Wednesday (November 4), but experienced some headwinds on Friday morning. Hitting US$25.93 per ounce before pulling back, the white metal added as much as 8 percent this week, its best performance since early August.
Year-to-date, silver has increased 43 percent from its January start, and is positioned to continue to move higher off rising industrial and safe haven demand that favor the metal.
Silver was holding in the US$25.34 range as of 10:41 a.m. EST on Friday.
Market volatility was also positive for platinum, pushing the catalyst metal above US$900 per ounce for the first time since September 18. Friday morning saw platinum reach US$908 before a reversal sent the metal back to the US$890 range.
As platinum struggled to hold onto gains made since Monday’s US$849 start, palladium rocketed higher, adding the most to its value in the precious metals sector.
Registering its best performance since March, palladium soared from US$2,077 per ounce on Monday to US$2,336, a 12 percent rise.
The sharp increase is closely related to the decision by Anglo American Platinum (LSE:AAL) to close the Phase B unit of its Anglo convertor plant in South Africa.
The plant has suffered several leaks and requires a rebuild, ultimately creating a bottleneck in the palladium sector. This news comes after a “force majeure” forced Amplats to shut its smelter in March.
“As a result of the closure of the ACP Phase B unit, the Company has lowered its refined production and sales guidance for 2020 to 2.5 million PGM ounces (previously 3.1-3.3 million PGM ounces),” reads a press release from the company.
At 11:14 a.m. EST on Friday, platinum was priced at US$889.50, while palladium was selling for US$2,323.
The base metals also trended higher throughout the week. Copper made a modest 1 percent climb in the first week of November. The red metal continues to trade near its year-to-date high of US$6,953 per tonne, which it reached on October 21.
Copper’s gains this period have been attributed to a weakening US dollar index. At 11:29 a.m. EST on Friday, copper was moving for US$6,798.
Zinc prices soared to a year-to-date high this session, reaching US$2,593 per tonne. Since markets tumbled in March, zinc has added more than 46 percent to its value.
On Friday morning, zinc was holding at US$2,593.
After reaching its year-to-date high in late October, nickel has shed some of those gains, but remains in the US$15,000 per tonne range. A resurgence in industrial demand as supply chains strengthen has benefited the metal. Nickel was trading for US$15,450 to end the week.
Despite rallying past US$1,800 per tonne this week, lead prices remain under pressure. The metal crept towards the US$2,000 per tonne range in mid-September.
“The (lead) price fell despite a fresh outflow of 1,400 tonnes predominantly out of LME-registered warehouses in Hamburg, while a fresh cancellation of 18,525 tonnes last week was also not enough to keep the metal’s underlying price above the nearby US$1,800-per-tonne support level,” reads a Fastmarkets report. Lead prices held at US$1,836 to close 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.