Precious Metals Weekly Round-Up: Gold Up as Trade Tensions Reignite

Gold climbed on Friday (July 12), once again finding itself over the US$1,400 per ounce level on the back of heightened trade tensions between the US and China and the US and the Middle East.  

The yellow metal is on track to post a weekly gain not only because of geopolitical concerns, but also because investors are leaning their attention towards the prospects of an interest rate cut by the US Federal Reserve.

“We have a slightly weaker US dollar, tensions in the Middle East and once again, prolonged trade dispute between the US and China, which are all supportive,” said Michael McCarthy, chief market strategist of CMC Markets (LSE:CMCX).

On Thursday (July 11), Fed Chair Jerome Powell alluded that a rate cut is likely at the Fed’s next meeting thanks to trade disputes and a global growth slowdown.

Adding fuel to the metal’s safe haven demand is US President Donald Trump stating that China has not been living up to promises it made on buying agricultural products from American farmers.

As of 9:58 a.m. EDT on Friday, gold was trading at US$1,407.40.

Silver was relatively flat on Friday, unable to make the gains that its sister metal gold has made in the last month.

David Morgan, publisher of the Morgan Report, told the Investing News Network that he is surprised that silver has garnered such little interest from investors during the recent months. However, Morgan believes that the white metal will climb 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 10:04 a.m. EDT on Friday, silver was trading at US$15.10.

As for the other precious metals, platinum was down close to 1 percent for the week, and, as of 10:06 a.m. EDT on Friday, the metal was changing hands at US$819 per ounce.

For palladium‘s part, it was also down slight on Friday, backing away from a 16 week peak hit during Thursday’s session. As of 10:07 a.m. EDT, the metal was trading at US$1,527 per ounce.

Precious metals top news stories

Our top precious metals stories this week include Q2 price updates for both gold and silver, as well as a report on Impala Platinum (Implats) (OTCQX:IMPUY,JSE:IMP) returning to annual profit thanks to higher platinum prices.

1. Gold Price Update: Q2 2019 in Review

The second quarter of the year proved to be one of the best that gold has experienced in years, making gains of over 7 percent by the close of Q2.

A softer US dollar, geopolitical issues and a slow in economic growth were the main catalysts behind the precious metal’s ability to trend between US$1,270 and US$1,420 per ounce throughout the quarter.

With an additional boost from the Federal Reserve hinting at an interest rate cut, investor interest has finally begun returning to the gold space.

2. Silver Price Update: Q2 2019 in Review

The silver price was relatively flat during the second quarter of the year, and while it managed to hit a high of US$15.41 per ounce on June 24, it only made gains of just over 1 percent in Q2.

While a softer US dollar, geopolitical issues and a slow in economic growth aided the precious metal’s ability to stay above the US$14 level, silver was unable to make the same gains its sister metal gold accomplished in Q2.

However, as the white metal heads into a new quarter and a potential interest rate cut is on the horizon, many industry insiders believe that silver is well-positioned to climb and may even outperform the yellow metal.

3. Implats to Return to Annual Profit Thanks to Platinum Price Rise

Shares of Implats climbed almost 4 percent on Monday (July 8) after the miner announced that it expects an annual profit thanks to an improvement in platinum-group metals prices and higher sales volumes.

The company, which is the second largest producer of the precious metal in the world, also stated that improved operational performance has boosted its headline earnings per share. They are expected to bounce back in the year ended June 30, 2019 after a loss of 1.71 rand per share in 2018.

“The increase in refined platinum production is primarily due to improved performance from Impala Rustenburg and a stock release of platinum compared to a build-up in the comparative period,” Implats noted in a press release.

Also in the news

In other precious metals news this week, the World Gold Council (WGC) released its Gold Mid-Year Outlook on Thursday, stating that the financial markets experienced large amounts of volatility in the first half of 2019, as stocks retraced their 2018 fourth-quarter losses by the end of April only to pull back again in May, and then reaching new highs only a few weeks after that.

Central banks took a more accommodative stance globally, bringing world wide bond yields to multi-year lows.

“As investors looked to balance higher stock prices with an increasingly uncertain environment, gold prices surged, making gold one of the best performing assets by the end of June,” the WGC noted.

The report also stated that, while gold prices were set on a significant upward trajectory in June, many investors have been generally more bullish this year.

Finally, several precious metal’s miners released quarterly reports this week, including New Gold (TSX:NGD,NYSEAMERICAN:NGD), which announced that it produced 132,556 gold-equivalent ounces (GEOs) in the second quarter, composed of 82,516 ounces of gold and 21.6 million pounds of copper, from its two mines in Canada.

Also this week, SSR Mining (TSX:SSRM,NASDAQ:SSRM) reported that it’s on track for higher yearly gold production, as it produced more than 98,000 GEOs from its three operations in Q2. Gran Colombia Gold (TSX:GCM) stated that it produced 18,882 ounces of gold in June, for a total of 57,882 ounces in Q2, up 9 from the same quarter in 2018.

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