Metals Weekly Round-Up: Widespread Fear Pushes Gold Higher

The price of gold continued to climb higher this week as renewed trade tensions between the US and China only added to recession woes and COVID-19 uncertainty.

Moving above US$1,740 per ounce, gold has climbed 18.6 percent since the mid-March sell-off and is poised to keep edging higher.

The other precious metals performed positively with the exception of palladium, while the base metals started the session with momentum and quickly fell back as industrial demand continues to be interrupted by the global pandemic.

The yellow metals ascent this week comes on the back of mounting concern the economic recovery will be more prolonged than originally expected and less likely to take the “V” formation many analysts had hoped.

Widespread uncertainty may be headwinds for markets but is a motivator for safe haven investors who usually choose gold.

In an interview this week, EB Tucker of Metalla Royalty & Streaming (TSXV:MTA,NYSEAMERICAN:MTA) told the Investing News Network (INN) he expects gold to pass its all-time high this year and explained why.

“We think it will happen in a very short period of time — for instance … we think that we’re going to see a big move up, and then another big move up and then a crest of the old high. (It will happen) so quickly in a several-day period that mainstream media is caught flatfooted,” he said.

Gold was trading for US$1,747.59 at 12:02 p.m. EDT.

Silver also performed well this week, starting at US$15.51 per ounce Monday (May 11) and growing by 6.4 percent to US$16.57.

The white metal is now back in the pre-coronavirus shutdown territory and expected to rise higher through investor appetite and weak economic data.

At 12:15 p.m. EDT, silver was changing hands for US$16.55.

Prices also grew for platinum this week and edged closely to the US$800 per ounce mark Friday (May 15) morning.

While automotive demand has slumped in the last three months, purchases of platinum coins has increased to record levels according to a research note from the World Platinum Investment Council.

“Cumulatively, by the end of April, sales of the 1 ounce (oz) platinum Eagle in 2020 had already reached 56,500 oz, a figure that is close to exceeding the 1999 annual total of 56,707 oz – the second highest on record (beaten only by the 133,002 oz  sold in 1998),” it reads.

Platinum was selling for US$785.50 as of 12.24 p.m. EDT.

Sister metal palladium experienced another week of loses, marking over a month of downward momentum.

Prices have already shed 35.3 percent since hitting an all-time high in late February of US$2,671 per ounce. The metal is likely to continue facing pressure from depleting auto demand and an industry that is looking to move away from palladium heavy catalytic convertors, towards a tri-metal blend.

In the base metals space, tough talk from US President Trump relating to trade with China has weighed on price growth, as is the concern that a second round of COVID-19 outbreaks could further hinder economic recovery.

Copper started the week at US$5,234 per tonne moved a few dollars higher a day later, then fell to US$5,155.50.

News that China’s industrial production climbed 3.9 percent in April following two straight months of declines was not enough to bring the red metal back. That said, news that July copper contracts are up modestly could be beneficial.

A tonne of copper was priced at US$5,155.50 at 12:43 p.m. EDT.

Zinc was faced with similar issues this period, breaking past US$2,000 per tonne on May 12, before settling back below US$1,950.

According ANZ Analyst,Soni Kumari zinc is unlikely to recover in the coming months since falling off early in the year.

“Demand risk is larger than supply. We see zinc demand severely hit in the world ex-China, while China will see a modest decline as infrastructure-led stimulus will limit losses,” Kumari told Reuters.

Zinc was valued at US$1,939 at 12:44 p.m. EDT.

Nickel also ended the five-day period lower, falling from US$12,275 a tonne on Monday, to US$12,084 Thursday (May 14).

Demand has plummeted due to pandemic closures.

As of 12:47 p.m. EDT, nickel continued to move for US$12,084.

Lead, made the most dramatic dip this session, falling 3.2 percent from US$1,629.50 per tonne to US$1,576. The drop is the metals worst performance since November 2015.

“Prices will continue to re-test 2015-2016 lows, but we see no further collapse towards 2008-2009 GFC-related lows,” Neil Hawkes, analyst at CRU told Reuters.

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