Precious Metals Weekly Round-Up: Gold Falls on Firm US Dollar

Gold and silver prices declinedon Friday (December 14) on the back of a strengthened greenback, which was supported by investors shifting their focus towards the expected US interest rate hike next week.

As of 9:20 a.m. EST, the yellow metal was trading at US$1,233.70 per ounce and on track for its biggest weekly decline in five weeks.As for the white metal, it was down 1.39 percent on Friday, sitting at US$14.49 per ounce as of 9:21 a.m. EST.

There is some downward pressure from a stronger dollar, said Vandana Bharti, assistant vice-president of commodity research, SMC Comtrade. “I don’t see much downside on gold going forward…the market is waiting for a strong trigger and currently it’s watching out for the Fed meeting.”

The Federal Reserve is expected to raise interest rates during its two-day meeting next Tuesday (December 18) and Wednesday (December 19). This will be the fourth rate hike for 2018, although more investor focus will surround the policy outlook for next year, which there is more uncertainty over.

“Market sentiment towards zero-yielding gold is at risk of souring ahead of the Fed meeting next week where interest rates are expected to be hiked. However, with the Fed potentially taking a pause on rate hikes next year, gold remains somewhat supported,” said Lukman Otunuga, a research analyst at FXTM.

“The near-term outlook for gold hangs on the dollar performance… Bulls remain safe above the US$1,240 support level with US$1,250.60 acting as a level of interest,” Otunuga added.

Lower interest rates reduce the cost of holding gold and silver and puts pressure on the US dollar.

As for the other precious metals, platinum was down 1.13 percent and as of 10:02 a.m. EST, it was trading at US$784.00 per ounce. For its part, palladium was down 2.33 percent for the week and as of 10:05 a.m. EST, the precious metal was trading at US$1,217.00 per ounce.

Precious metals top news stories

Our top precious metals stories this week feature a 2019 gold outlook report from the Investing News Network (INN), Southern Gold (ASX:SAU) going alone on development at the Cannon gold mine and our round-up of the top TSX-listed silver stocks of 2018.

1. Gold Outlook 2019: Waiting for the Fed to Blink

The price of gold has sunk almost 5 percent in 2018, and did not live up to many market watchers’ predictions. In Q3, the yellow metal dipped below the US$1,200-per-ounce mark and spent a significant amount of time circling that price range.

Geopolitical concerns, consistent interest rate hikes and a rallying US dollar have kept prices down throughout the year. As of Friday (December 7), gold was trading at US$1,249.40.

With the start of 2019 just around the corner, many investors are now wondering what will happen to gold next year. Here, the INN looks back at gold’s price performance in 2018 and what analysts expect from the yellow metal in 2019.

2. Southern Gold Flies Solo on Cannon Gold Mine Development

Southern Gold will make a solo attempt on advancing the development of the Cannon gold mine in Australia, the company announced on Monday (December 10).

The miner revealed that Northern Star Resources (ASX:NST) has chosen not to exercise the right-to-mine with Southern Gold that it acquired in March through a deal with Westgold Resources (ASX:WGX).

In a new agreement between Northern Star and Southern Gold, the latter will accept a transfer of the mining lease for the Georges Reward deposit, immediately to the north of Cannon, from Northern Star.

“The execution of this agreement with Northern Star is an important development. It enables Southern Gold to move forward with the asset where there is considerable value to be unlocked by a small underground mining operation,” said Southern Gold Managing Director Simon Mitchell.

3. Best Silver Stocks of 2018 on the TSX

Like its counterpart gold, silver has seen rocky price action throughout 2018.

However, despite those struggles, some silver companies still managed to make progress and expand the resource potential of their assets. As the year comes to a close, INN has rounded up the best silver stocks on the TSX by share price performance so far this year. 

Here are the top 3 stocks of 2018 on the TSX:

1. SSR Mining (TSX:SSRM,NASDAQ:SSRM)
2. Maya Gold & Silver (TSX:MYA)
3. Sierra Metals (TSX:SMT)

All year-to-date and share price information was obtained on December 10, 2018 from TradingView. All companies listed had market caps above C$50 million at that time.

Also in the news

Also making news this week is Paulson & Co winning control of Detour Gold’s (TSX:DGC) board.

On Thursday (December 13), Paulson & Co. convinced the miner’s shareholders to overthrow the bulk of the company’s board of directors, including its interim CEO, ending a volatile six-month proxy battle.

Five of the Paulson-backed nominees were chosen, while Detour Chairman Alex Morrison and interim CEO Michael Kenyon were removed from the board during the special shareholders’ meeting.

Additionally, James Gowans was appointed the Chairman of Detour Gold’s board of directors.

Gowans commented on the results, stating, “[w]ith the distraction of the proxy contest now behind us, I welcome our new directors and look forward to working with them to recruit a new CEO and build value for all shareholders. I would also like to take this opportunity to thank the outgoing board members for their service and dedication to Detour Gold and wish them success in their future endeavours.”

Following the results, John Paulson, founder of Paulson & CO, stated, “[w]e support Detour Gold’s new board of directors and believe that our investment is now in the capable hands of experienced, independent and professional directors.”

Finally, on Friday (December 14), the president of South Africa’s Association of Mineworkers and Construction Union (AMCU) said that the union’s Sibanye-Stillwater (NYSE:SBGL,JSE:SGL) members will remain on strike, calling the miner’s argument that the action is now illegal false.

Joseph Mathunjwa was speaking at a media conference which was organized to respond to the miner’s decision to extend a wage agreement in place with a number of other unions to AMCU members. The AMCU claimed that this move was put into place so that the strike would no longer be protected.

“As far as we are concerned, we are still on strike,” Mathunjwa said, adding the union has seen no documentation suggesting the strike is now illegal.

“We… advise our members not to report to work on Saturday as they are still in a protected strike until their demands have been met by the employer,” he added.

For its part, Sibanye’s CEO, Neal Froneman commented on the extended wage agreement, stating, “[t]he safety and wellbeing of all Sibanye–Stillwater employees and their families is our first priority and management has been concerned about the timing of the strike and the financial hardships that employees who have been on strike, or not at work, will suffer due to the “no work, no pay” principle, which still applies.

“I urge all employees to report for work, and only for those who need it, to apply for the cash advance. We understand the financial challenges facing many of our employees at this time, and would like to have some comfort that all of our employees and their families are able to enjoy a safe and peaceful holiday period together,” he added.

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