Precious Metals

Precious Metals Investing

The price of gold is up 11 percent year-to-date despite experiencing volatility in March and early April — it has emerged as the safe haven asset of choice amid economic uncertainty.

Gold climbed above US$1,700 per ounce early in the week and held above US$1,720, with the metal’s positive performance benefiting producers despite various mine closures around the world.

The yellow metal is on track to continue its upward trend, as several reports this week outlining the toll of COVID-19 on output peg the reduction of gold production this year impacting supplies.

“We’ve seen roughly 10 million ounces or so being impacted by the shutdowns and the slowdowns that we’re seeing at many mines sites around the world — it’s a pretty significant change,” said Ken Hoffman during a virtual keynote address for the World Gold Forum.

The price of gold is up 11 percent year-to-date despite experiencing volatility in March and early April and has emerged as the safe have asset of choice amid economic uncertainty.

“Gold looks as if it might come just short of the all-time high of US$1,922 that it saw back in 2011. But we do think that … we’ve only seen a short, small part of what will continue to be a bull run,” said independent analyst Ross Norman, during his remote presentation for the World Gold Forum.

At 10:45 a.m. EDT, an ounce of gold was trading for US$1,724.53.

Silver started the week above US$15 per ounce before falling to US$14.60 on Tuesday morning (April 21). Weak industrial demand has continued to weigh on the white metal’s value.

The restarting of Chinese factories is a positive that is expected to motivate silver prices in the near-term, while increased interest in silver ETFs and drop in production are forecasted to be long term price catalysts.

“We have the silver price hitting a high before the end of (the year) of US$19, but even at the same time, we still see the (gold/silver) ratio around the 90s at year end. But bear in mind of course, the market is very small, it doesn’t take much money coming in to have those more pronounced moves in silver,” Philip Newman, director of Metals Focus told the Investing News Network.

Silver was selling for US$15.18, as of 10:55 a.m. EDT.

Broken supply chains and a decline in auto manufacturing remains a headwind in the platinum space.

The metal fell to a 5-year low of US$628 per ounce in March and has struggled to make back its loses.

Demand for vehicles will undoubtedly remain low in 2020, preventing significant price growth.

An ounce of platinum was moving for US$755 at 11:12 a.m. EDT.

Palladium faced similar issues this week, as the price tumbled from US$2,100 on Monday, to US$1,813 a day later.

News that South Africa would allow mining activity to resume at 50 percent capacity, following a more than 30-day lockdown, helped the auto-catalyst metal tick back above US$1,900 mid-week.

Palladium was valued at US$1,920, as of 11:19 a.m. EDT.

Another week of closures and lockdowns continued to drag base metals lower. Copper started the session at US$5,169.50 per tonne, then fell to US$4,994.50.

News that an experimental antiviral drug hoped to treat COVID-19 failed, and fears of the long term of an economic recession are credited with moving the red metal lower.

“The economic data we’ve had has just been horrendous, they just indicate that we’re facing a very deep contraction,” Ole Hansen, head of commodity strategy at Saxo Bank, told Reuters.

“If we’re going to have a deep contraction, then demand will be under pressure and that is keeping industrial metals markets from joining the exuberance we’ve seen in the stock market.”

At 11:53 a.m. EDT, copper was selling for US$5,120.50.

Zinc also fell lower as supplies swelled. According to a Fast Markets report zinc inventories in London ballooned by 37 percent to 100,075 tonnes as of April 23.

Subsequently the metal has fallen off dramatically. As of 11:58 a.m. EDT, zinc was selling for US$1,855 per tonne.

After climbing steadily last week, the price of nickel fell back, moving as low as US$11,895 per tonne.

Continued economic fallout weighing on industrial calls for the metal is attributed for the loses.

Nickel was moving for US$12,010, at 12:04 p.m. EDT.

While zinc is in oversupply, stores of lead dropped to their lowest level since October 2018 this week when the reached 7,074 tonnes.

The depletion wasn’t enough to bolster prices however as the metal dropped more than 3 percent week-over-week.

At 12:17 p.m. EDT, lead was trading for US$1,632.50 per tonne.

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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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