Precious Metals Weekly Round-Up: Gold Surpasses US$1,600, Keeps Going

Gold surged past US$1,600 this week on the back of concern that the COVID-19 coronavirus is slowing the global economy.

The yellow metal broke the key threshold on February 18 and hasn’t looked back since, hitting a seven year high earlier today (February 21) when it reached US$1,648.96 per ounce.

Silver also benefited from gold’s tailwinds, climbing past the US$18 an ounce mark, reaching US$18.56, where it remains range bound.

This week’s gold performance is the best the currency metal has displayed since topping the US$1,600 range in February 2013, and many analysts are forecasting the yellow metal will continue to make gains in 2020, breaching the US$2,000 threshold.

“Gold should perform as a convex macro asset market hedge, resilient during ongoing risk market rallies but a better hedge during sell-offs and vol spikes,” Citi Group analysts told the media.

The firm believes the economic impact of COVID-19 will continue to push investors towards the safe haven asset class, of which gold reigns supreme. Because of this, Citi Group expects the price of gold to top US$2,000 over the next 12 to 24 months.

An ounce of gold was trading for US$1,647.86 at 10:23 a.m. EST.

Demand from the safe haven asset crowd also helped silver this week, allowing the metal to record its largest weekly gain in six months.

Despite lagging gold’s ascent, silver is anticipated to outperform its sister metal in the long term.

According to the most recent data from the US Geological Survey, silver production was slightly higher in 2019, resulting in a small surplus. However, consumption and demand was up across the board, and investor purchases also grew, which offset the surplus and supports a higher silver price.

Silver was exchanging hands for US$18.51 at 10:26 a.m. EST.

As gold and silver exceeded key threshold points, palladium surged past all its previous highs to record the largest weekly gain of the precious metals sector.

The platinum group metal climbed by as much as US$380 an ounce, when it rocketed from US$2,355 at the beginning of the period and moved as high as US$2,735 on Wednesday (February 19).

“The increasing demand for palladium is being driven by increasing global emission standards as governments act to reduce air pollution,” Impala Canada (OTCQX:IMPUY,JSE:IMP) CEO Tim Hill told the Investing News Network.

Impala operates the Lac des Iles palladium mine in Northern Ontario and foresees long-term demand remaining high as the electric vehicle industry grapples with growing pains.

“For example, challenges facing a transition towards battery electric vehicles include the scarcity of required materials, commercial battery production costs, inadequate infrastructure for battery charging and the functional limitations of battery electric vehicles, themselves,” he said. “Until these challenges can be tackled in a meaningful way, the robust demand for palladium will continue.”

As of 10:30 a.m. EST, an ounce of palladium was selling for US$2,585.

The last of the publicly traded precious metals, platinum, also experienced positive motivators this week allowing it pass the US$1,000 per ounce level. The grey metal moved as high as US$1,013 on gold’s coattails, before slipping below US$980, where it remains range bound.

At 10:32 a.m. EST, an ounce of platinum was moving for US$978.

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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.