Precious Metals Weekly Round-Up: Gold Keeps Close to US$1,500

Gold was steady on Friday (August 9), sitting just above the US$1,500 per ounce level as trade tensions between the US and China escalated.

The precious metal is set to make its biggest weekly gain in more than three years, following a week that saw it break through US$1,500 for the first time in six years as investors sought out its safe haven nature.

“The trade spat is driving the market crazy. We don’t rule out technical corrections, but US$1,500 is now the new normal unless trade relations take a turn in a right direction,” said Jigar Trivedi, commodities analyst at Mumbai-based Anand Rathi Shares & Stock Brokers.

The current trade war concerns are stemming from a report showing that Washington is delaying its decision regarding licenses for US firms to restart trade with Huawei Technologies.

In addition, US President Donald Trump announced that the country will be adding a 10 percent tariff on another US$300 billion worth of Chinese imports, with the new tariffs coming into effect on September 1.

Gold is also being supported by a down US dollar and a dovish stance on policy from central banks worldwide. The central banks of New Zealand, Thailand and India surprised market participants recently when they, like the US, cut interest rates. 

Speaking about gold’s impressive rally, which took place during Wednesday’s (August 7) session, EB Tucker, who is a director at Metalla Royalty & Streaming (TSXV:MTA,OTCQX:MTAFF) as well as the mind behind two publications at Casey Research, stated that he believes the metal’s upward momentum represents a key breakthrough for the metal.

“I’m shocked by how many professional investors are on vacation right now checking emails once a day. Add to that the longtime gold bulls who tell me they don’t trust this rally. Believe me, it’s real. And both of these groups will chase the price higher when they finally plug back in. If you’re long gold now, the action to take is no action at all,” he said.

Tucker predicted at the end of 2018 that gold would reach US$1,500 this year. He reiterated that call last week at the Sprott Natural Resource Symposium.

All in all, gold has risen 4.3 percent so far this week and about 17 percent for the year. As of 12:30 p.m. EDT on Friday, gold was trading at US$1,502.68.

Silver has also benefited from this latest round of geopolitical issues, breaking US$17 per ounce midweek. 

Tucker also has his sights set on the white metal, telling the Investing News Network (INN) that he predicts it will move up to US$20. “At some stage silver wakes up and plays catch up. That’s a move worth owning,” he said. “We could easily see US$20 silver, which is a roughly 18 percent move from here. That can happen quickly.”

Many market watchers are paying attention to what gold does in order to forecast where silver is headed.

Randy Smallwood, president and CEO of Wheaton Precious Metals (TSX:WPM,NYSE:WPM), agrees with Tucker’s sentiment on the white metal.

“Silver is the high beta play on precious metals. One of the reasons that silver moves like that is because so much of it is produced as a by-product from lead–zinc mines and copper mines,” he told INN on the sidelines of the Sprott Natural Resource Symposium.

Silver’s rally this week has landed it in position to deliver a weekly gain of almost 5 percent, and, as of 9:58 a.m. EDT on Friday, the metal was changing hands at US$16.89. 

As for the other precious metals, platinum was relatively flat on Friday after experiencing some dips in the previous two sessions. 

Despite the recent stagnant nature of the precious metal, Trevor Raymond, director of research at the World Platinum Investment Council, told INN at the Sprott Natural Resource Symposium that there is potential for a flat production rate, which would be a great achievement for the metal.

“Certainly, growth doesn’t look possible. The potential of flat supply and demand growth is what the market is finding quite interesting at the moment.”

As of 10:10 a.m. EDT on Friday, the metal was trading at US$860.80 per ounce.

For palladium‘s part, it was up just under 1 percent on Friday, managing to stay within the US$1,400 per ounce range, but fading behind gold’s glow for the first time since late last year.  

While the metal has not made any impressive gains in weeks, there are still many market participants in palladium’s corner, with Metals Focus stating that it believes the metal will continue to rise. The firm forecasts that autocatalyst demand will more than likely go up by 3.6 percent in 2019, setting records at 8.59 million ounces due to tighter emissions standards.

As of 10:16 a.m. EDT, palladium was up almost 0.6 percent, trading at US$1,406. 

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