Metals Weekly Round-Up: Strong Dollar Weighs on Gold Price

Gold was holding around US$1,930 per ounce on Friday (August 21), set to record a second week of declines since breaching the crucial US$2,000 mark.

A strong US dollar is pulling the yellow metal back as economic recovery concerns provide tailwinds.

The other precious metals also faced pressure this session, but the base metals performed confidently amid positive manufacturing and consumer data.

Starting the week at US$1,957, the gold price climbed above US$2,010 on Wednesday (August 19). The gain was short-lived, however, as it fell later that day to US$1,927.90.

Despite the volatility this session, gold is still on track for a record-setting year.

The yellow metal is up 24 percent year-to-date, and gold exchange-traded funds have also registered solid gains in 2020. July marked the eighth straight month of positive inflows — 166 tonnes were added over the month, pushing global holdings to 3,758 tonnes.

Although gold is especially attractive in times of uncertainty, as Will Rhind pointed out, the yellow metal has always been the premier long-term investment.

Watch the full interview with Rhind above.

“I think that what you’re seeing in terms of the underlying price just reflects what’s going on in the market,” the CEO of GraniteShares told the Investing News Network this week. “To me you want to be a long-term holder of gold because it’s uncorrelated to the other investments you have in your portfolio.”

At 10:53 a.m. EDT on Friday, an ounce of gold was trading for US$1,940.70.

Silver’s push towards US$30 per ounce continued this week, with the metal touching US$28.27 on Tuesday (August 18). Headwinds mid-session prevented silver from holding its ground, pushing it back below US$27 by the end of the week.

Like gold, silver has been on the decline for the last two weeks, but is still maintaining broader gains made since January. Year-to-date, the dual metal has added 47 percent to its value.

Silver was selling for US$26.76 at 11:00 a.m. EDT on Friday.

Platinum posted the steepest decline in the precious metals space this week, falling 5 percent since Monday (August 17). Decreased jewelry sales resulting from COVID-19, paired with weakened automotive demand, are the primary catalyst behind the decline.

The metal’s price has returned to its pre-pandemic range, but is still off its year-to-date high of US$1,022 per ounce, set on January 17. On Friday at 11:17 a.m. EDT, platinum was priced at US$901.

After a challenging June and July, the palladium price is holding above US$2,000 an ounce. Since falling to US$1,522 in March, palladium has been unable to maintain the US$2,200 level, although a brief surge at the end of July pushed the automotive metal to US$2,242.

Since then, persistent supply chain disruptions and depressed vehicle demand have pulled the metal back to the US$2,000 range. Palladium was trading for US$2,084 at 11:23 a.m. EDT on Friday.

The copper price spiked early in the week, climbing from US$6,342.50 per tonne to US$6,667. The red metal was unable to maintain the new year-to-date high, pulling back a day later.

According to a Fastmarkets report, weak economic data out of Europe was the catalyst behind the drop.

“The euro’s rally has come to a halt this week on growing concerns that coronavirus is coming back strongly in parts of Europe and will hurt the economic recovery,” said Fawad Razaqzada, a Thinkmarkets analyst. On Friday morning, copper was moving for US$6,594.

Zinc made a minor gain this week, edging up from its Monday value of US$2,403 per tonne. Well above its mid-March level of US$1,773, zinc set a year-to-date high this session at US2,466.50.

Despite the move, analysts have pointed out that US$2,500 is the resistance level for the metal, and it is currently trading below that. Zinc was selling for US$2,466.50 early on Friday.

Nickel also registered a year-to-date high this week, topping US$14,700 per tonne. Unable to maintain the high, its price settled back to US$14,666 on Thursday (August 20), and it remained there on Friday.

The lead sector also posted an uptick. By mid-week, lead was up 1.94 percent from Monday to US$1,994 per tonne. The move brought the metal closer to its price high for the year, US$2,026 in January.

Some of those gains were shed later, and by Thursday lead was back to the US$1,964 range and holding.

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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.