Precious Metals Weekly Round-Up: Gold Rallies on Softer US Dollar

Gold gained momentumon Friday (March 15), rebounding from its deep dip in the previous session, thanks to a cooling in the US dollar as concerns surrounding a slowdown in global economic growth climbed and sent investors to the safe haven of the precious metal.

The greenback slipped 0.2 percent against a basket of other major currencies, and was on track for its biggest weekly loss since the beginning of December.

“The dollar has weakened and gold as a safe-haven asset has seen support from Brexit uncertainty. As long as gold can hold the US$1,290 level, it can reach the first level of US$1,302 and then US$1,310,” said Ajay Kedia, director at Kedia Commodities.

In terms of a global economic slowdown, the Bank of Japan cut its assessment on overseas economies on Friday, saying they were showing signs of a slowdown. It also revised down its view on exports and output.

Meanwhile, comments from China’s Premier about a slowing economy have left investors believing that one of the world’s biggest economies is struggling, which in turn is supporting bullion.

In the United States, data released on Thursday (March 14) underscored growing pressure on the economy. The number of Americans filing applications for unemployment benefits increased to levels that were not expected and new home sales fell more than anticipated in January.

“Data from US is not so good. So, weak US data and Brexit are holding gold prices up,” Kedia said, adding the prevailing uncertainty around US-China trade was also supporting gold.

As of 9:35 a.m. EST, gold was trading at US$1,303.10 per ounce.

Meanwhile, silverclimbed 1 percent as it also benefitted from its safe haven nature as economic concerns continue.

As of 9:40 a.m. EST, silver was trading at US$15.30 per ounce — still remaining below the US$16 threshold.

As for the other precious metals, platinum was up close to 1 percent on Friday and as of 9:42 a.m. EST, the metal was trading at US$828.00 per ounce.

For its part, palladium was relatively flat, but market watchers are bracing for a surge in prices following Fiat Chrysler Automobiles’ (NYSE:FCAU) recall of close to 900,000 gasoline-fueled vehicles on Thursday. As of 9:47 a.m. EST, the metal was trading at US$1,536.00 per ounce.

Precious metals top news stories

Our top precious metals stories this week includes a joint venture between Barrick Gold (TSX:ABX,NYSE:GOLD) and Newmont Mining (NYSE:NEM) and interviews with both Adrian Day of Adrian Day Asset Management and Alain Corbani, head of commodities at Finance SA, from this year’s Prospectors & Developers Association of Canada (PDAC) convention.

1. Barrick Gold and Newmont Mining to Join Forces in Nevada

Barrick Gold and Newmont Mining signed an implementation agreement with the intention of creating a joint venture (JV).

It will combine their respective mining operations, assets, reserves and talent in Nevada, the companies announced in a joint statement on Monday (March 11).

With the JV news comes the official closure of Barrick’s hostile takeover bid for Newmont, which appeared to be dead in the water last week when Newmont shareholders rejected the merger proposal from Barrick. Barrick President and CEO Mark Bristow noted that this new agreement marked the successful culmination of a deal that had been more than 20 years in the making.

2. VIDEO — Adrian Day: The Biggest Problem for Gold Right Now

At this year’s PDAC convention in Toronto, the Investing News Network caught up with Adrian Day of Adrian Day Asset Management, who shared his thoughts on the gold space and what’s ahead for the yellow metal in 2019.

“I am quite constructive on the price of gold,” Day said.

He added, “I think there are several things that are positive for the gold price,” with those including stock market volatility and the US Federal Reserve.

In January, the central bank decided to hold interest rates steady, noting that it will be “patient” before making any other decisions.

“What it is more important is not that the Federal Reserve put a pause in interest rate [hikes], but that they put a pause in the face of stock market volatility,” Day said.

3. VIDEO — Alain Corbani: The Missing Ingredient for a Spike in Precious Metals Prices

INN spoke with Alain Corbani, head of commodities at Finance SA, at this year’s PDAC convention.

Corbani told INN the one ingredient that is missing to trigger a large upswing in the gold price and why he believes that silver won’t start making moves upwards until the increase in gold prices become “validated.” He also shared his predictions on both gold and silver prices for this year and why the mining sector is in need of some “new faces” to start a new chapter of profitability within the space.

“[We] have a perfect environment for a higher gold price now — the only missing ingredient in that equation that would trigger gold to a higher level is the US currency,” he said.

Also in the news

Also making news this week, Goldcorp (TSX:G,NYSE:GG) announced on Thursday that operations at its Cerro Negro mine in Argentina have restarted following the Asociacion Obrera Minera Argentina (AOMA) striking at the asset.

Although a reason for the strike has not been reported by either party, a conciliation process resolution was issued by the provincial government of Santa Cruz and accepted by the parties.

“All personnel have been remobilized and the site is ramping back up to normal operations,” Goldcorp noted.

Additionally, Anglo American Platinum (Amplats) (LSE:AAL,OTC Pink:AGPPF) announced that it has donated 270 hectares of land to the Rustenburg local municipality and the Rustenburg Alchemy Development Trust to support sustainable land reform and transformation.

The miner, which previously donated 204 hectares in 2014, said that the recent donation demonstrated Amplats and the group’s continued commitment to South Africa and the country’s ongoing transformation journey.

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