Metals Weekly Round-Up: Gold Stalls on Talk of Easing Lockdowns

- May 1st, 2020

Gold closed the month in the red, slipping as low as US$1,671.80 in Friday’s pre-trading hours on optimism that an end to COVID-19 lockdowns is in sight.

The gold price finished the month of April in the red, slipping as low as US$1,671.80 per ounce in pre-trading hours on Friday (May 1).

The fall ended the yellow metal’s steady ascent, which began after a pronounced period of liquidation in March brought gold as low as US$1,471.

Growing optimism that easing lockdowns will bolster markets and that economic activity will resume weighed on the broader precious metals sector as well this week, with silver and palladium also sliding back from their Monday (April 27) prices.

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In the face of this week’s headwinds, gold has still climbed 8.2 percent year-to-date and is nearing historic highs, said CPM Group’s Jeffrey Christian during a World Gold Forum presentation.

Describing gold’s movements as a stealth bull market, he explained, “Our estimate is that the average might be US$1,640 to US$1,650. That compares to an annual average of US$1,670 at its peak in 2012.”

Mark Stacey, head of portfolio management at AGF Investments, also referenced gold’s historic price action in a Tuesday (April 28) webinar, saying the yellow metal is beginning a steady tick upward.

“Despite the move in gold and gold stocks more recently, it is still very early on when you compare back in history,” he said. “Back the last time that we saw gold and gold stocks rally — back in ’02 all the way up to 2011 — (gold had) a 500 percent 10 year rolling return. Right now, we are at about 40 percent.”

An ounce of gold was trading for US$1,693 at 12:34 p.m. EDT on Friday.

For much of April, silver traded flatly between US$15 per ounce and US$15.40, trapped by declining industrial demand.

Unlike gold, which gained back its mid-March losses, the white metal has been unable to even approach its February high of US$18.60.

That may change as investor demand is projected to grow in the space this year due to renewed safe haven diversification appetite.

“Silver investment is forecasted to rise and reach about 79 million ounces in the current year, which would be the highest level of net investment since 2016,” said Rohit Savant, vice president of research at CPM Group, at the firm’s Silver Yearbook presentation on Tuesday.

At 12:35 p.m. EDT on Friday, silver was trading for US$14.90.

Platinum also experienced volatility this session, trending as high as US$764 per ounce and then tumbling to US$746 before the morning bell on Friday.

The autocatalyst metal has slipped 22.3 percent year-to-date, and is likely to continue to face price pressure from a disrupted auto manufacturing sector.

Platinum was selling for US$757 at 12:36 p.m. EDT on Friday.

Palladium is facing similar challenges as broken supply chains and global lockdowns ended its steady 18 month ascent.

The sector also faces challenges down the line, as substitutions in the auto sector see the amount of palladium used in catalytic convertors reduced for an increase in platinum.

Palladium was trading for US$1,834 per ounce as of Friday at 12:36 p.m. EDT.

The base metals sector saw some positivity this week, with copper and zinc pulling out small gains, while nickel stumbled lower.

Copper began the period at US$5,165.50 a tonne and gradually edged higher.

Looking ahead, the red metal is projected to play an important role as society emerges from pandemic lockdowns into the new normal — that was a point made by Gianni Kovacevic of CopperBank Resources (CSE:CBK,OTC Pink:CPPKF) during a recent copper-focused webinar.

In a post-COVID-19 world, “You’re going to have trillions of dollars in stimulus going to different types of applications, including electromobility and energy storage — and that will take four or five times more copper per application,” he said.

At 11:28 a.m. EDT on Friday, copper was moving for US$5,231.

Confidence that an end to lockdowns could be in sight also benefited zinc this week.

The metal was able to climb US$1,891 per tonne to US$1,930 on Wednesday (April 29). Renewed tensions regarding trade talks between China and the US on Thursday (April 30) were reflected in a slight decline.

At 12:12 p.m. EDT zinc was valued at US$1,929.50.

Nickel faced its own demand decline challenges this week, which weighed on its price. After plateauing at the US$12,250 per tonne range, prices slid mid-week.

On Friday as of 12:17 p.m. EDT, nickel was trading for US$12,134.

Lastly, lead also fell lower after climbing to US$1,623 per tonne on Tuesday, its highest value this week. The metal then continually fell lower for the remainder of the period.

Lead was priced at US$1,610 as of 12:21 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.

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