Precious Metals

Precious Metals Investing

Gold surged to US$1,744 this week for the first time since September 2012 as more stimulus efforts were announced.

Gold moved as high as US$1,744 per ounce this week for the first time since September 2012, benefiting from increased stimulus from central banks.

The yellow metal held above US$1,700 for most of the week, but fell in pre-trading on Friday (April 17).

Economic support also benefited the other precious metals, which are likely to end the week just out of the red. Base metals faced increasing headwinds as industrial demand continued to slip.

Despite sliding below US$1,700 over the last 24 hours, gold is still poised to record a 3.5 percent week-over-week gain. The surge experienced early in the week was snuffed out on Thursday (April 16) on news that US President Donald Trump will green-light the restart of economic activity in certain states.

Reports of falling physical gold demand in China also weighed down the currency metal’s growth. According to Reuters, some Chinese jewelers had stocked up ahead of the Lunar New Year, and are now stuck with oversupply.

At 11:15 a.m. EDT on Friday, gold was trading for US$1,693.83.

Silver spent the first half of April edging higher, breaking past US$15 per ounce on April 8. While the white metal faced volatility this week, it has held above that threshold.

Though it climbed as high as US$15.76, ongoing drops in industrial demand and investor preference for its yellow sister have kept the silver price low.

“The key to higher silver prices will remain, as always, investor buying and selling patterns. If investors sustain the renewed interest in physical silver that began to emerge in March, prices may trade along the lines we project,” Jeffrey Christian of CPM Group told the Investing News Network (INN).

CPM has forecasted that silver may test the US$14 level again in Q2, but will likely claw back up toward a range of US$16.50 to US$19 during the rest of the second quarter and third quarter.

However, Christian did note, “If investors revert to the disinterest that they exhibited over the past few years, prices will be weaker. There seems to be some investor dissatisfaction with the marketing hype they get bombarded with about silver, which has in the past few years turned investors off to this metal.”

An ounce of silver was selling for US$15.12 as of 12:25 p.m. EDT on Friday.

Platinum was also challenged this week as a continued decline in auto manufacturing weighed on demand. The gray metal started the week at US$745 per ounce, then tested the US$790 threshold before falling back below US$768.

Currently platinum is valued at US$765.

The first half of April brought steady losses for palladium, which fell as low as US$2,035 per ounce on Sunday (April 12). The platinum-group metal, which also used it automotive converters, has been less impacted by a demand drop due to supply issues that were present before the COVID-19 pandemic closed the majority of global industry.

Palladium climbed as high as US$2,175 this week before settling back in the US$2,100 range.

A 12:35 p.m. EDT on Friday, palladium was being sold for US$2,080.

Base metals were confronted with more bad news this week, as S&P Global dramatically reduced its global GDP growth forecast for 2020 to a meager 0.04 percent.

While the GDP outlook looks bleak, copper did pull off a brief gain this period when it hit US$5,119 per tonne. The red metal then dipped to US$5,050. Copper had a rough Q1 — after slipping from US$5,200 early in the year, the metal has yet to fully recover and shows little promise for the months ahead, according to Capital Economics’ Kieran Clancy.

“With the virus-related disruption still yet to peak in most major copper consumers (other than China), we expect copper demand to remain incredibly weak in Q2 as well,” Clancy told INN.

At 12:47 p.m. EDT on Friday, copper was selling for US$5,098.50.

In its report, S&P Global notes that nickel’s 2020 bull run is likely to be totally derailed by COVID-19, with global output falling 6.4 percent for the year. Demand is also expected to be lower than first calculated, dipping by as much as 8.1 percent.

Nickel was priced at US$11,657 as of 12:50 p.m. EDT on Friday.

Following an early April slide that drove the metal below US$1,630, lead was making gains, edging to US$1,698 per tonne on April 8.

This week, lead fell off, landing at US$1,664. Prices for lead are projected to experience less volatility than the other base metals prices due to the metal’s use in car batteries, which need to be replaced steadily.

At 12:54 p.m. EDT on Friday, a tonne of lead was valued at US$1,675.

Zinc was able to end the week with a gain, starting at US$1,906 per tonne and trending higher.

For S&P Global, drops in zinc demand will be offset by reduced mine output in the medium term. An expectation that zinc will perform positively in the second half of the year informed the market intelligence firm’s price prediction.

“We expect this to result in prices falling to average US$2,065/t in 2020, which is significantly higher than the March 31 price of US$1,894.75/t,” the report states.

Zinc was trading for US$1,923.50 at 1:01 p.m. EDT on Friday.

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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.



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