Metals Weekly Round-Up: Renewed Risk Appetite Weighs on Gold

Increased European stimulus and investor risk appetite weighed on the gold price this week.

Slipping below US$1,680 per ounce on Friday (June 5) morning, optimism that the economy is starting to rebound led to the yellow metal’s poorest showing since early May.

Interest in other assets classes stalled the other precious metals, while the base metals space pulled off a broad gain.

The session started with gold above US$1,730 with the metal struggling to hold above US$1,700 over the next few days. A Thursday (June 4) announcement from the European Central Bank expanding the economic stimulus package dragged prices to a 30-day low of US$1,679.97.

“The European Central Bank’s move yesterday is supporting risk-taking …. It seems more investors holding gold are switching out to the equity market,” Giovanni Staunovo, an UBS analyst told Reuters.

Heightened interest in other sectors is a potential opportunity in the gold space, according to EB Tucker. Despite the current price dip.

“There’s a very hot period for gold, and it’s a period when the value of other assets is in question. That is now. We’re right on the edge of that, we’re just starting it,” the director at Metalla Royalty & Streaming (TSXV:MTA,NYSEAMERICAN:MTA) said during an interview.

At 10:02 a.m. EDT an ounce of gold sold for US$1,681.53.

After trending higher weekly in May, silver fell below US$18 per ounce this week. Though considered both a precious and industrial metal, silver has faced challenges on both fronts this week.

Decreasing safe have demand, paired with logistical and demand challenges from industrial end users have weighed on the metal’s ability to lock in gains in June.

A Silver Institute report conducted by CRU Group also notes that demand from the photovoltaic solar sector may have peaked in 2019 at 100 million ounces (Moz).

“We forecast a slow decline in silver demand from 2020 to 2023 as PV capacity added per year dips, while attempts at silver thrifting in PV panels continues at a diminished rate,” it reads.

Silver was valued at US$17.28 as of 10:30 a.m. EDT.

Platinum sat flatly at the US$820 level for the last week in May, however the autocatalyst metal has experienced intense volatility for the first week of June.

Starting the period at US$829, renewed mine activity in South Africa, helped the metal edge above US$846 late in the day Monday (June 1).

In the days since platinum has shed 7.2 percent.

At 10:34 a.m. EDT platinum was trading for US$784.

Mid-week palladium fell from its weekly high of US$1,915 per ounce to US$1,772 (June 4). The 7 percent slip was reversed early Friday as the price surged back above US$1,850.

Platinum’s industrial troubles are also present in the palladium sector, however an existing supply crunch prior to COVID-19 closures has allowed the automotive metal to insulate some of its value.

Palladium was moving for US$1,881 at 10:56 a.m. EDT.

Base metals performed well this week locking in gains across the board.

Copper started the week valued at US$5,376.50 per tonne and steadily climbed higher.

Economic recovery and optimism have been catalysts for the red metal which experienced its best performance in 13-weeks.

“The balance of risks has shifted towards a more bullish near-term outlook for copper,” Citi analysts told Reuters. “Prices could reach US$5,750 within three months.”

Copper was valued at US$5,425 at 11:50 a.m. EDT.

Zinc also made gains this week benefiting from improved sentiment. Edging as high as US$2,025.50 per tonne on Tuesday (June 2) the metal regained losses registered when the pandemic stagnated end use sectors.

At 11:53 a.m. EDT, zinc was valued at US$1,998.50.

Nickel made large moves this week, climbing from its Monday value of US$12,418 per tonne and rocketing to US$12,812.

A resurgence in stainless steel demand for electric vehicles in China is the most prominent tail wind propelling the base metal at present.

While some analysts are concerned that stockpiling in the nickel sector may lead to a price slip in the future, others believe demand will quickly eat up existing surpluses and bolster the price in the long term.

At 12:01 p.m. EDT nickel was trading for US$12,608.

A decrease in lead mine production during the first quarter of 2020 has benefited prices for the metal in June.

It is estimated that output fell 3.4 percent over the three-month period, which was offset by a 7.4 percent decrease in lead metal usage across the globe.

Rising demand and the restarts to industrial sectors are driving the metal’s price 3.7 percent higher this week.

As of 12:07 p.m. EDT lead was selling for US$1,679.50 per tonne.

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.