Precious Metals Weekly Round-Up: Gold Dips as Risk Appetite Improves

- January 18th, 2019

Precious metals dipped on Friday due to a rising US dollar. Meanwhile, the greenback climbed on the back of easing US-China tensions.

Gold prices slipped on Friday (January 18) as the US dollar improved on new hope for a calm in the US-China trade dispute which lifted the stock market.

The yellow metal fell to its lowest level in more than a week during Friday’s morning session and is on track for its first weekly decline in five weeks.

“Rising risk appetite among market participants is reflected in the rising stock markets,” said Commerzbank analyst Daniel Briesemann.

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“[T]oday gold just does not seem to be in demand as a safe haven,” he added.

Global stocks increased to their highest point in more than a month following a report that hinted at progress being made in resolving the trade dispute between the United States and China.

Additionally, the greenback garnered support when the US Treasury yields rose amid improved risk appetite.

“It looks like the US$1,300 hurdle seems hard to overcome … Gold has the potential to cross that mark and to move even higher but not for now,” Briesemann added.

As of 11:20 a.m. EST, the yellow metal was trading at US$1,282.30 per ounce.

Meanwhile, silver was also down for the week, as it is affected by the same elements as the yellow metal.

As of 11:22 a.m. EST, silver was down 0.84 percent, sitting at US$15.38 per ounce.

As for the other precious metals, platinum was down 1.36 percent and as of 11:30 a.m. EST, the metal was trading at US$798.00 per ounce.

For its part, palladium hit another record this week when it broke through the US$1,400-per-ounce threshold early in Thursday’s (January 17) session. This is the metal’s third time topping gold in the last two months. Despite signs that global vehicle sales are down, investors are paying closer attention to the shortage in supply and acting on that concern.

As of 11:37 a.m. EST, palladium was down from its peak, trading at US$1,357.00 per ounce, making it the highest-trading precious metal.

Precious metals top news stories

Our top precious metals stories this week feature a look at what Newmont Mining’s (NYSE:NEM) US$10-billion acquisition of Goldcorp (TSX:G,NYSE:GG) could mean for the gold space, the Association of Mineworkers and Construction Union (AMCU) notifying Sibanye-Stillwater (NYSE:SBGL,JSE:SGL) that it will begin striking at the miner’s South African (SA) platinum-group metals (PGMs) operations and Detour Gold (TSX:DGC) surpassing its 2018 production guidance.

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1. Here’s What the Newmont-Goldcorp Deal Could Mean for the Gold Space

Newmont Mining’s US$10-billion acquisition of Goldcorp, announced Monday (January 14), may be key to the gold sector’s revival, some market watchers say.

The transaction, along with the massive US$18.3-billion Barrick Gold (TSX:ABX,NYSE:ABX) and Randgold Resources (LSE:RRS) merger announced last September, is being seen as seen as a catalyst for capital and for increased investor interest in the gold space.

“Newmont’s acquisition of Goldcorp is a very good thing for the gold sector for a couple of reasons. First, an acquisition of this magnitude brings much-needed media attention to a sector which hasn’t had many headlines over the course of the last two years,” Brian Leni, founder of Junior Stock Review, told the Investing News Network (INN) via email after the news.

2. AMCU Takes Strike to Sibanye’s South African PGMs Operations

After months of strikes led by the AMCU at Sibanye-Stillwater’s SA gold operations, the union has sent notice to the miner that it will now begin a secondary strike at the company’s South African PGMs operations.

In a press release issued by Sibanye on Tuesday (January 15), the miner reported that the union would begin striking at the company’s PGMs operations next Tuesday (January 22) morning.

“Although not surprising, the notice for a secondary strike at our South African PGM operations in Rustenburg is disappointing, as all stakeholders will be negatively affected, but more so those employees who will be exposed to the no work, no pay principle,” stated Neal Froneman, CEO of Sibanye.

3. Detour Gold Surpasses 2018 Production Target

Detour Gold had a record-setting 2018, surpassing its production target for the year and setting a quarterly production record in Q4, the company announced this past Tuesday.

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During the fourth quarter, the miner produced 158,200 ounces of gold, bringing total gold production for the year to 621,128 ounces — an increase of 9 percent from 2017.

“We surpassed our production target for 2018 with a strong finish to the year. The fourth quarter represented our third successive quarter with overall operational improvement with record total tonnes mined and gold production,” said Frazer Bourchier, COO.

Also in the news

Also making news this week is the announcement on Friday that Mali’s gold production climbed 23 percent in 2018.

According to Mines Ministry spokesman Boubacar Sissoko, Mali’s industrial production of gold reached 60.8 tonnes last year.

Output rose thanks mostly in part to the start of production at B2Gold’s (TSX:BTO,NYSEAMERICAN:BTG) Fekola and Hummingbird Resources’ (LSE:HUM) Komana mines.

Gold production is expected to rise again in 2019.

Finally, Rob McEwen told Bloomberg that he is sticking to his prediction that gold will leap to US$5,000 per ounce thanks to a weaker greenback and declining demand for “trendy” assets like cannabis stocks.

“Once people get over buying cryptos and biotech and cannabis stocks they’re going to start looking at gold again,” said the chairman and chief owner of McEwen Mining (TSX:MUX,NYSE:MUX).

When asked about his price target, McEwen replied, “I’ve always liked US$2,000 and beyond that US$5,000.”

Back in November, McEwen spoke with INN, stating that any investor who didn’t own gold, should start looking at it. 

“I think it’s an opportune time to be taking a look at the sector then maybe starting to make an investment here because I think the upside is quite compelling,” he told INN.

Don’t forget to follow us @INN_Resource for real-time news updates!

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

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