Precious Metals Weekly Round-Up: Gold Climbs on Weaker US Dollar

Gold made gains and steadied on Friday (September 13) bringing it back about the key US$1,500 per ounce level as the greenback declined thanks to a strong euro. 

Despite the uptick, the yellow metal’s climb was capped by equity markets that were supported by a potential thaw in the ongoing US-China trade tensions.

“The main reason is that the dollar is lower. Market focus is now on the Federal Reserve meeting and retail sales data, which is due today,” said Georgette Boele, analyst at ABN Amro (AMS:ABN).

Even with gold weakening in the last few weeks, market watchers still believe that there are a slew of factors supporting the precious metal.

Analysts said that fears around a global economic downturn and negative-yielding government debt worldwide, paired with dovish monetary policy outlook by global central banks will support gold long-term.

“(Gold) is still in a lateral trading range. We are seeing a technical rebound from the US$1,500 level. The support level of US$1,500 is quite strong and is holding prices up,” said Carlo Alberto De Casa, chief analyst at ActivTrades.

Looking ahead, experts in the gold space continue to predict increasingly high levels for the price of gold.

Speaking at the Precious Metals Summit in Beaver Creek, Colorado, Rob McEwen, chairman and chief owner of McEwen Mining (TSX:MUX,NYSE:MUX), told the Investing News Network that he sees more gains in store for the yellow metal.

“I’ve always had a US$5,000 number, and I think it can go much higher than that,” he commented.

McEwen pointed to overarching global elements like high levels of debt and monetary expansion as factors he sees moving the gold price.

Even though McEwen is confident in the metal’s movements, he doesn’t have a distinct timeline as to when the huge increases could take place. “You should get exposure to gold right now,” he said. “But in terms of a timeline, the ultimate height — that’s a good question. It’ll be a couple of years out from here.”

As of 9:32 a.m. EDT on Friday, gold was trading at US$1,504.70.

Silver also ticked up slightly on the back of a down greenback and ongoing global economic concerns.

Due to the fact that the white metal tends to follow the path of gold, many investors believe that it too is still in a prime position to continue the strong gains that it has been making since August.

At the recent Precious Metals Summit in Beaver Creek, Colorado, Dr. Peter Megaw, chief exploration officer at MAG Silver (TSX:MAG,NYSEAMERICAN:MAG), told INN that he sees silver outperforming the yellow metal.

“I think what’s changed is global economic uncertainty, which has driven up the price of gold. Silver tends to follow gold, and when silver breaks out it tends to break out much farther than gold,” he said.

In terms of the white metal’s vitality, Megaw stated, “I think it depends a lot on gold; it depends on the trade situation between the US and China, and the sort of deliberate fomenting of political and economic uncertainty. A lot depends on how Donald Trump feels on any given morning whether the price is going up or down.”

As of 10:35 a.m. EDT on Friday, silver was changing hands at US$17.97.

As for the other precious metals, platinum was up close to 1 percent on Friday, continuing to trade above the US$900 per ounce level.

Platinum prices have surged over the last month thanks to greater safe haven demand paired with supply concerns,

While analysts at FocusEconomics see the price of the metal rising slightly from its current level, they believe it will continue to be muted and trail behind its sister metal palladium. However, the market is currently regarding platinum as the cheaper precious metal when stacked against gold. If predictions that the yellow metal will continue its price increase prove true, platinum will more than likely continue to be supported by this as investors look for a cheaper alternative to gold.

As of 10:05 a.m. EDT on Friday, the metal was trading at US$957.

For its part, palladium lost over 1 percent on Friday after experiencing an all-time high during the previous session was it peaked at US$1,621.55.

Looking ahead, panelists for FocusEconomics believe that while prices will dip slightly, the metal will continue to be supported throughout the year.

“Prices will still be elevated by recent historical standards, aided by the ongoing supply deficit and a shift to cleaner vehicles, which should support demand. The evolution of the US-China trade spat, a potential faster-than-expected economic slowdown and the possible substitution for platinum in vehicles remain key factors to watch.”

As of 10:28 a.m. EDT, palladium was trading at US$1,583 per ounce.

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