Precious Metals Weekly Round-Up: Gold Price Dips from 6 Year Peak

Gold eased on Friday (July 19) as a result of investors booking profits as prices for the metal shot past US$1,450 per ounce and hit a six year peak.

Despite the slight ease in Friday’s session, the yellow metal is on track to post a second week of gains thanks to ongoing geopolitical tensions between the US and the Middle East, as well as the US and China.

“What we have been seeing over the past couple of hours is a natural bit of profit-taking with gold having made this big move higher. Investors are holding their breath going into the end of the week and the seasonally slow summer period,” said Mitsubishi (OTC Pink:MSBHF,TSE:8058) analyst Jonathan Butler.

“But gold is still looking good,” he added. “The interest rates and dollar environment, uncertainties over the US-China trade war and now the geopolitical situation being the icing on the cake; all of this has created a very supportive environment for gold.”

Adding fuel to the metal’s rally is the very real chance that the US Federal Reserve will cut interest rates by at least 25 basis points during its next policy meeting at the end of this month.

As of 9:09 a.m. EDT on Friday, gold was trading at US$1,435.50.

Silver started making more movements in the markets this week, making gains not seen since July 2016 when it jumped almost 7 percent.

With gold continuing its climb, it makes sense that the white metal is now receiving more interest from investors. In fact, David Morgan, publisher of the Morgan Report, told the Investing News Network that the white metal will rebound when gold makes greater gains.

“Everything revolves around gold right now. The key trend is for gold to convince the investing community that the recent six year high, breaking out from overhead resistance, is the beginning of a major move to the upside,” he said. “Once investors return to the precious metals, silver will catch up and most likely overtake gold, bringing the gold silver ratio back to a level of 70 to 1 or lower.”

As of 9:22 a.m. EDT on Friday, silver was above US$16 per ounce and was changing hands at US$16.41.

As for the other precious metals, platinum was up over 1 percent for the week, and, as of 9:24 a.m. EDT on Friday, the metal was trading at US$856 per ounce — close to US$40 more than this time last week.

For palladium‘s part, it made gains of just shy of 1 percent on Friday, trading at US$1,513 per ounce as of 9:28 a.m. EDT.

Precious metals top news stories

Our top precious metals stories this week focus on Q2 price updates for palladium and platinum, as well as a preliminary economic assessment (PEA) from Dundee Precious Metals (TSX:DPM,OTC Pink:DPMLF).

1. Palladium Price Update: H1 2019 in Review

Palladium made huge gains throughout the first half of this year, climbing over 24 percent during H1 2019 thanks to high demand and low supply.

The metal, which overtook gold in December 2018 for the first time in 16 years, continued on a bull streak during H1 thanks to growing demand for more emission-friendly gasoline-powered automobiles. These vehicles tend to use more palladium in autocatalysts compared to diesel vehicles.

Click the link above for an overview of the factors that impacted the palladium market in H1, plus a look at what investors should watch out for in the months to come.

2. Platinum Price Update: H1 2019 in Review

Platinum was relatively overlooked for its sister metal palladium in the first half of the year, but the precious metal still managed to gain over 5 percent during H1 2019.

Prices for platinum were mainly weighed down by a lack of demand for diesel-powered vehicles in Europe and China, as the metal is primarily used in catalytic converters for these vehicles.

However, while overall demand for the metal is still down year-to-date, rising palladium prices have prompted some experts to suggest that platinum’s popularity could rise if substitution comes into play.

3. Dundee Releases Timok Gold PEA, Plans for Optimization

Dundee Precious Metals rose close to 4 percent on Monday (July 15) after releasing a PEA for its Timok gold project in Serbia.

The miner said that the PEA will provide a foundation for project optimization.

“With further optimization, Timok has the potential to provide significant accretive organic growth for relatively low initial capital in a region where we have had a presence for many years,” said Rick Howes, president and CEO of Dundee.

Also in the news

In other precious metals news this week, the World Gold Council (WGC) released its 2019 Central Bank Gold Reserves Survey on Thursday (July 18), which indicates that gold should enjoy extended support from impressive central bank demand in both the short and medium term.

The WGC found that 11 percent of emerging market and developing economy (EMDE) central banks have plans to increase their gold reserves over the next 12 months.

“This is similar to last year’s purchases, when 12 percent of the world’s 155 EMDE central banks bought gold, giving rise to 651 tonnes of central bank gold demand. This was the highest level on record under the current international monetary system,” the WGC notes.

Finally, shares of Acacia Mining (LSE:ACA,OTC Pink:ABGLF) shot up close to 18 percent when the miner released a joint statement with Barrick Gold (TSX:ABX,NYSE:GOLD) on Friday announcing that the companies have finally come to an agreement on a takeover offer.

Under the deal, Barrick will purchase the remaining shares of Acacia at a value of approximately 232 pence per Acacia share, for a total of roughly US$428 million.

The offer is a premium of 53.5 percent to Acacia’s closing price of 155 pence per share on May 20, the day prior to the first announcement of a possible offer. The bid is also a premium of 24.2 percent to Acacia’s closing price of 187 pence per share on Thursday.

Barrick first attempted to seal a deal with Acacia in May of this year, when the gold major proposed a deal worth approximately US$285 million that was eventually turned down by Acacia.

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