Precious Metals Weekly Round-Up: Gold Steady as Trade Tensions Ease

- May 17th, 2019

Precious metals declined for the week as investors with risky appetites lost interest in the metals’ safe haven nature.

Gold remained relatively flat on Friday (May 17) after taking hits in the previous session thanks to a rebound in the US dollar. The US dollar’s rise came after trade tensions between the US and China eased in the later part of the week. 

The yellow metal dipped 0.8 percent on Thursday (May 16), suffering from its largest one day price decline since April. Investors began to step away from the precious metal after it peaked just above US$1,300 per ounce on Monday (May 13).

“On one end, gold has support from prevailing uncertainties in the financial markets relating to the trade talks and concerns over growth outlook. At the same time, the dollar is expected to stay strong for at least the next two weeks,” said Julius Baer (SWX:BAER) analyst Carsten Menke.

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The greenback made gains that pushed it close to a two week high against a basket of currencies, which in turn made gold more expensive for those who hold other currencies.

These elements pushed the metal below the US$1,280 level, which left many market watchers with a bearish outlook.

“A clear recovery to the $1,300 level, and prices holding above this psychological threshold, would confirm the supportive scenario seen in the last two weeks, while a fall below $1,280 would be seen as a negative element,” said Carlo Alberto De Casa, chief analyst with ActivTrades.

As of 9:53 a.m. EDT on Friday, gold was down 0.44 percent, trading at US$1,280.80.

Meanwhile, silver followed gold’s lead on Friday, dipping 0.76 percent for the day after hitting its lowest price since December 2018 when it traded at US$14.42 per ounce in the previous session. Silver experienced an over 2 percent decline for the week.

As of 10:00 a.m. EDT, the white metal was down 2.23 percent, trading at US$14.40.

As for the other precious metals, platinum also took some hits this week, dipping 2.27 percent overall and 1.8 percent on Friday alone. As of 10:03 a.m. EDT, it was trading at US$818 per ounce.

Palladium was unable to escape the declines that its fellow precious metals faced, tumbling 1.44 percent on Friday and 1.74 for the week. As of 10:05 a.m. EDT, the metal was trading at US$1,298 per ounce.

Precious metals top news stories

Our top precious metals stories this week include a Q1 platinum report from the World Platinum Investment Council (WPIC), gold rising above US$1,300 and a platinum-group metals supply and demand report from Metals Focus.

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1. WPIC: Platinum Demand Spikes in Q1 on ETF Investment Surge

Platinum demand rose by 32 percent year-on-year during the first quarter of 2019 thanks to a substantial increase in exchange-traded fund (ETF) investment, the WPIC states in its latest quarterly platinum report, which was released on Monday.

The surge in investment demand offset declines in the automotive, jewelry and industrial sectors, with total investment demand reaching 765,000 ounces. Of those 765,000 ounces, 690,000 were owned by ETF holdings.

“Today’s report shows significant investment demand growth — an indication that platinum demand growth potential is finally outweighing long-standing negative sentiment,” said WPIC CEO Paul Wilson.

2.  Gold Eyes US$1,300 Following China’s Tariff Retaliation

Gold reclaimed the US$1,300 level during Monday’s session thanks to Beijing declaring a retaliatory tariff hike in response to the US raising tariffs on Chinese goods last week, sending investors towards the safe haven of the yellow metal.

China revised its US tariff target list to US$60 billion as a way to hit back at Washington for tariffs imposed on US$200 billion of Chinese goods.

“China retaliating as fast as they did was a clear signal they’re not going to be pushed around,” Samantha Azzarello, global market strategist for JP Morgan Asset Management, said to Bloomberg.

3. Metals Focus: More Gains in Store for Palladium in 2019

Palladium is set to remain in a supply deficit for the duration of 2019, while platinum’s supply surplus will linger, says Metals Focus.

In the precious metals consultancy’s Platinum and Palladium Focus 2019 report, released on Monday, the firm reported that platinum recorded a supply surplus of 349,000 ounces in 2018, while palladium posted another large deficit of 821,000 ounces.

“These (numbers) impacted investor sentiment, helping drive palladium’s outperformance of the platinum price,” the firm says.

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Also in the news

Also this week, Sibanye-Stillwater’s (NYSE:SBGL,JSE:SGL) acquisition of Lonmin (LSE:LMI,OTC Pink:LNMIY) officially received approval from the Competition Appeal Court of South Africa (CACSA) when it dismissed an appeal led by the Association of Mineworkers and Construction Union.

On Friday, CACSA made the decision to uphold the Competition Tribunal’s approval of the deal, which was decided upon in November of last year.

Moving forward, a shareholders’ meeting that is slated to take place on May 28 will ultimately determine the final outcome of the deal.

Additionally, Bloomberg reported that IAMGOLD (TSX:IMG,NYSE:IAG) has begun exploring the option of selling all or part of the company, as more and more consolidation takes place within the gold space.

Bloomberg notes that people familiar with the matter have revealed that IAMGOLD is allegedly working with advisors and has even spoken to various potential buyers.

When the Investing News Network spoke with the company at Mines and Money New York at the beginning of May, CEO Stephen J.J. Letwin said, “I think there’s investor fatigue, and the bottom line is there’s probably too many of us relative to the fact that the capital pool is shrinking.”

In response to the Bloomberg report, IAMGOLD issued a statement saying the company does not comment on speculation and rumors.

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

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