Metals Weekly Round-Up: Headwinds Weigh on Price Momentum

An uptrend that lasted most of May pushed gold above US$1,900 per ounce to end the month. However, June headwinds worked against the metal late in the session, sending it lower.

Values fell as low as US$1,860 on Thursday (June 3) before a small uptick set in.

Positive growth in the US dollar paired with promising economic data has dampened gold’s ascent.

With less than 400,000 applications for unemployment in the US last week, analysts think the Federal Reserve may introduce more stringent monetary policy in the weeks ahead.

While gold may face headwinds in the future, Gwen Preston of Resource Maven thinks there is plenty of potential in the mining sector.

“There’s a lot of upside ahead if we just look at the past and how gold miners are valued relative to the price of gold,” she said. “There’s multiples ahead for gold miners just to catch up to historic ratios for their valuations vs. the price of gold, let alone should the price of gold continue to rise.”

Watch Preston discuss the factors that will benefit gold above.

Gold was valued at US$1,894.96 at 10:47 a.m. EDT on Friday (June 4).

Silver traded flatly for the last session of May. Monday (May 31) saw the white metal priced at US$27.77 per ounce, and a brief bump sent prices to US$28.44 a day later.

Pressures weighing on gold prevented silver from retaining its US$28 level. By Friday, silver was back in the US$27 range. At 10:57 a.m. EDT that day, silver was moving for US$27.77.

Platinum values shed 2.4 percent throughout the week, sending the metal to a 60 day low. Dipping to US$1,138 per ounce, the metal spent most of May holding above US$1,160.

Despite its weak performance at the end of May, platinum’s future looks promising as it is closely tied to the push for clean energy.

“Platinum’s green credentials are pretty good for the fact that it does improve emissions out of vehicles. It can help decarbonize through the hydrogen economy, and it also purifies water,” Trevor Raymond with the World Platinum Investment Council told the Investing News Network.

“It does a whole lot of good stuff in chemicals; it reduces the amount of electricity and increases the yield in lots of chemical processes.”

Platinum was valued at US$1,157.50 at 11:07 a.m. EDT on Friday.

After breaching an all-time high in early May, palladium has shed some of its gains. Still holding above US$2,700 per ounce, supply issues continue to support higher price thresholds for the catalyst metal.

At 11:12 a.m. EDT on Friday, palladium was priced at US$2,732.

The base metals experienced a consolidation mid-week as prices slipped lower.

“We thought the metals were looking a bit top heavy on Thursday so the pullbacks were not so surprising, neither is the dip-buying because generally underlying sentiment has proved to be very strong in recent months,” states a Friday Fastmarkets note. “But we will now need to wait to see what the US employment report holds and how the market reacts to that. The metals are vulnerable to profit-taking should broader markets get nervous about central bank tightening.”

Copper edged to US$10,212.50 per tonne on Tuesday (June 1), but fell below the US$10,000 by Thursday. Looking forward, Roskill believes the red metal’s demand fundamentals are promising.

“In particular, China may see an increase of 6 percent year-on-year in refined copper production, with Q1 production up 19.5 percent,” reads a Roskill report. “Demand will continue to be driven by an increase in power utility spending, the property sector and consumer goods.”

Friday morning saw copper holding at US$9,967.

Zinc moved above the US$3,000 per tonne level to start June, but headwinds sent values lower by Thursday. As of Friday morning, zinc was selling for US$2,977.50.

Nickel prices soared for the last half of May, climbing 8 percent from US$16,781 per tonne on May 25 to US$18,147 on Tuesday. The growth post-2020 has been attributed to positivity in Chinese and battery sector demand, according to a Roskill nickel overview.

“Despite the volatility characteristic of the nickel price, such an increase was counterintuitive given that the market remained in surplus throughout the majority of 2020,” it states. “Market speculation, driven by concerns in some quarters of an impending shortage of nickel suitable for use in batteries, helped to fuel the bull narrative.” Nickel was priced at US$17,945 early on Friday.

Rounding out the base metals was lead, which traded sideways for the first week of June. Starting the transition period at US$2,208 per tonne, a brief spike sent prices to US$2,228.50 mid-week. Lead had slid back below US$2,200 by the end of the week, and on Friday was valued at US$2,193.50.

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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.