Precious Metals Weekly Round-Up: Gold Benefits from Brexit Limbo

- October 25th, 2019

All of the precious metals were up this week as concerns surrounding Brexit and a slow in global economic growth propelled their prices.

Gold rallied on Friday (October 25) after Brexit once again found itself in limbo thanks to Prime Minister Boris Johnson demanding a December 12 election and EU ambassadors still considering the length for an extension to the exit deal. 

Due to this, it is unlikely that EU governments will make a Brexit decision this week, sending investors to seek out the precious metals as a safe haven.

“Brexit has gone into another limbo and there is still some uncertainty over the progress of (US-China) trade talks. These are increasing risk aversion and pushing gold higher,” Lukman Otunuga, analyst at FXTM, told Reuters after the news hit.

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Also supporting the yellow metal are concerns surrounding the health of the global economy and the ongoing trade spat between the US and China.

On Thursday (October 24), data was released that showed new orders for key US-made capital goods and shipments declined last month, a sign that business investment continues to lose steam amid the trade war concerns. Additionally, investors are bracing for another potential US rate cute come next week.

“Overall, the sluggish global growth, and with that the expectation of rate cuts, continue to provide underlying support (for gold),” said Ole Hansen, commodity strategist at Saxo Bank.

After gaining 1 percent for the week, gold is headed for its best week in five weeks, and, as of 10:07 a.m. EDT on Friday, gold was trading at US$1,512.80 per ounce.

Silver followed the yellow metal’s lead this week, also making gains of over 1 percent for the week and once again trading over the US$18 per ounce level.

Between the global growth concerns and a potential interest rate cut this month, many industry insiders believe that the metal is primed to make substantial gains.

“It’s obvious that the US-China trade dispute is a big driver for gold right now. But I think silver’s significant outperformance is a clear sign that monetary concerns are also sparking demand, and that the rally will be a long-term, secular move as a result,” Brien Lundin, editor of Gold Newsletter, told INN in an email.

As of 10:30 a.m. EDT on Friday, silver was changing hands at US$18.23.

As for the other precious metals, platinum was up close to 2 percent Friday, finding its footing as it breached the US$900 per ounce level.

The metal managed to hit its highest level since the end of last month and is expected to continue to trade above US$900 per ounce thanks to gold’s impressive movements.

“Platinum is also expected to benefit from positive spillovers from gold. However, its sizeable and rising above-ground stocks will remain a key headwind over the rest of 2019 and in 2020,” Metals Focus noted.

Palladium was once again the star precious metal for the week, hitting an all-time high of US$1,785.50 during Thursday’s session.

In fact, the metal has rocketed since the start of the year, gaining 36.5 percent since January.

Mitsubishi (OTC Pink:MSBHF,TSE:6503) analyst Jonathan Butler told Reuters earlier this month he sees the white metal hitting the US$2,000 range in the next 12 to 18 months.

That forecast is music to the ears of global palladium companies that are positioned to capitalize off the gains the precious metal is making.

As of 10:45 a.m. EDT on Friday, palladium was trading at US$1,757.

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Securities Disclosure: I, Nicole Rashotte, 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.

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