Metals Weekly Round-Up: Vaccine Hope Weighs on Gold

Gold was on track for its weakest performance since September, falling 5 percent on Monday (November 9) as markets opened. News of a potential COVID-19 vaccine from Pfizer (NYSE:PFE) paired with US election results appearing to favor Biden pushed the currency metal lower.

The positivity aided in a stock market rally as well as a rise in bond yields, leading to a minor gold liquidation. The optimism waned mid-week as coronavirus cases in North America and Europe surged.

To date, 52.9 million people globally have contracted COVID-19, of which 1.3 million have succumbed to the virus. In total, 34.2 million COVID-19 patients have recovered.

The realization that Pfizer’s vaccine is still far from being ready and will be logistically challenging to transport led to a late-week uptick for the precious metals sector.

“Investors may also be wary of other companies announcing trial data in the coming weeks, which if successful, could put more downward pressure on gold,” Jeffrey Halley, senior market analyst at OANDA, told Reuters on Thursday (November 12).

The analyst also noted that gold will face headwinds moving towards US$1,900 per ounce.

Dipping as low as US$1,858, gold began to trend higher on Wednesday (November 11), but remained well off the US$1,900 threshold.

Despite November’s price dip, gold exchange-traded funds (ETFs) recorded an 11th consecutive month of net inflows in October. In its latest report, the World Gold Council notes that gold ETF holdings rose by 20.3 tonnes in October.

“Positive inflows continued during October, albeit the lowest monthly increase in 2020, as most risk assets, like stocks, were lower on the month,” the report reads.

An ounce of gold was priced at US$1,889 as of 10:25 a.m. EST on Friday (November 13).

The silver price mirrored gold’s performance, falling sharply to start the week. After edging to a six week high of US$25.92 per ounce, values tumbled to US$23.77 midday on Monday.

Trading near US$24 for the remainder of the session, the metal climbed higher on Friday, approaching the US$25 level. Silver was moving for US$24.66 at 10:54 a.m. EST that day.

Prices for platinum also faced volatility, dropping as low as US$846 per ounce. A brief rally late on Monday held until late Tuesday (November 10), when prices hit US$883. The uptick was quickly reversed when platinum fell back to US$854 on Wednesday.

By Friday morning, prices had crept back to US$883.

Unlike the other precious metals, palladium’s reaction to market positivity was delayed. Holding above US$2,300 per ounce off production challenges in South Africa early in the week, values slid to US$2,188 to end the day on Wednesday.

Palladium has not recovered those losses, and was trading for US$2,196 at 11:06 a.m. EST on Friday.

The base metals space fared similarly, with a broad decline registering mid-week. Copper opened the period trading at a year-to-date high of US$7,034 per tonne. The value of the red metal has not breached the US$7,000 level since June 2018.

By Wednesday, the momentum was lost when prices slumped to US$6,68.50. Concern that surging COVID-19 cases will lead to a new round of lockdowns has dampened economic recovery hopes.

The uncertainty has also made forecasting difficult. Roskill estimates that global GDP is likely to decline 3.9 percent this year. This will be followed by a 5.7 percent rebound in 2021.

“This recovery is far from secure and not yet consistent across metals markets, but we are simultaneously starting to see a pick-up in investment interest,” reads the firm’s macroeconomic overview. “2021 looks like being a re-set year as (and if) President-elect Biden enters office, and the mining industry returns to reassessing its longer-term plans.”

Copper was selling for US$6,904 on Friday.

Zinc prices hit an 18 month high of US$2,664.50 per tonne on Monday, driven by market optimism. Zinc’s upward trend has prompted Fastmarkets to forecast an upside target price of US$2,800 for the metal.

“Zinc appears to be consolidating comfortably, with pullbacks supported by underlying buying interest amid expectations of rebounding demand, particularly while infrastructure spending from China feeds through,” reads a Thursday report. By Friday, zinc had pulled back to trade for US$2,593.

Nickel opened the session at US$15,862 per tonne and was able to end the week slightly higher at US$15,874. Lead also made a strong showing mid-week, reversing a small dip to close the week at US$1,868.50 per tonne.

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