Precious Metals Weekly Round-Up: Gold Heads for Weekly Gain

Gold was relatively flat on Friday (May 24) after making gains in the previous session, when the US dollar dipped from the two year peak it hit on Wednesday (May 22) and as global equities declined on the back of escalating China-US trade tensions. 

The yellow metal eased on Friday as stock markets regained momentum, but the greenback remained weak as investors turned their attention to renewed hopes of a rate cut from the US Federal Reserve — which kept gold on track for a weekly gain.

“Gold is doing more or less what it is supposed to be, finding a bid when the other markets fell, but the bid hasn’t really been strong enough this week to push it to levels which could have attracted renewed buying interest. It’s not out of the woods yet,” said Ole Hansen, commodity strategist with Saxo Bank.

Despite the markets moving upwards, the US dollar remained down after reaching a two year high on Wednesday, thanks to weak US manufacturing activity data that had investors concerned that the US economy could take a large hit from the trade conflict with China.

“I think the weak data increases the risk on getting behind the curve and cutting rates. That’s potentially where we would see the next move higher in gold when the markets get more aggressive on rate cuts in the US,” Hansen said.

As of 9:18 a.m. EDT on Friday, gold was trading at US$1,283.70 per ounce.

Meanwhile, silver followed gold’s lead on Friday, and dipped slightly after climbing over 1 percent in the previous session.

Despite the white metal’s relatively lackluster year, industry experts still believe in the metal’s potential. In fact, firms polled in a recent report from FocusEconomics stated that silver could reach as high as US$17.80 per ounce before the end of this year.

As of 9:26 a.m. EDT, the white metal was trading at US$14.54.

As for the other precious metals, platinum made small gains on Friday after reaching its lowest level since February 15 on Thursday (May 23), putting it on track for its fifth straight weekly loss. As of 9:28 a.m. EDT, the metal was trading at US$801 per ounce.

Palladium made the most gains on Friday, ticking up over 1 percent and once again entering into US$1,300 per ounce territory. The metal is on track for a weekly gain, which would be its first in four weeks. As of 9:31 a.m. EDT, the metal was up 1.16 percent, trading at US$1,311.

Precious metals top news stories

Our top precious metals stories this week include Barrick Gold (TSX:ABX,NYSE:GOLD) proposing a plan to increase its stake in Acacia Mining (LSE:ACA), a report on platinum jewelry demand from Platinum Guild International (PGI) and Newmont Goldcorp (TSX:NGT,NYSE:NEM) receiving C$1.75 million from the government of Quebec to fund a C$3.5 million project.

1. Barrick Prepares to Purchase Remaining Shares of Acacia

Barrick Gold proposed to increase its stake in Acacia Mining on Tuesday (May 21) under a plan where the Canadian miner will acquire all outstanding shares of Acacia that it does not own for US$285 million.

The strategic move by Barrick comes after two years of negotiations with the government of Tanzania over an ongoing dispute with Acacia. The African country has refused to enter into an agreement directly with the London-listed miner, which was accused of US$200 billion in tax fraud in 2017.

According to the offer, the acquisition will materialize through a share-for-share exchange of 0.153 Barrick shares for each ordinary share of Acacia, which represents a total value of US$787 million for the Tanzania-focused miner. Barrick currently owns 63.9 percent of Acacia.

2. PGI: Bridal Sector to Continue Dominating Platinum Jewelry Demand

PGI released its Platinum Jewellery Business Review, revealing that, while platinum jewelry demand is still dominated by the bridal industry, female self-purchases, men’s jewelry purchases and purchases made by young buyers are on the rise.

The guild’s yearly report surveys over 1,000 manufacturers and retailers as well as 1,000 consumers to provide retailers and investors with information on how platinum jewelry is performing, while highlighting trends that will affect the four key platinum jewelry markets: Japan, China, the US and India.

PGI CEO Huw Daniel explained that of the four key markets, three experienced growth in 2018, while all four markets were able to grow their platinum jewelry offerings as the industry was able to branch out beyond its stronghold in the bridal market.

3. Newmont Gets C$1.75 Million from Quebec for Futuristic Gold Mine

Newmont has received C$1.75 million from the government of Quebec to fund a C$3.5 million project that will connect the Éléonore mine, located in Quebec, to a high-speed network.

The project, which is being touted as Quebec’s first interconnected “mine of the future,” will be delivered by non-profit organization Eeyou Communications Network. It involves 124 kilometers of fiber-optic cable that will be laid from the Eastmain 1A link to the mine site.

“With this technology backbone in place, new sustainable and responsible mining developments can consolidate the leadership role Quebec plays in Canada’s mining sector and beyond,” said Sophie Bergeron, general manager at the Éléonore asset.

Also in the news

Also this week, McEwen Mining (TSX:MUX,NYSE:MUX) declared commercial production at its Gold Bar mine on Thursday. The mine, which is located in Nevada, will be supervised by Jack Henris, McEwen’s new general manager who came from Goldcorp.

“Under the leadership of our new GM Jack Henris, our team at Gold Bar is focused on identifying and implementing operational enhancements to increase our daily throughput. I’m pleased to see that the mine has operated at 125 percent of our planned 7,200 tonnes per day production rate on several days during the past month,” said President and COO Chris Stewart.

McEwen also reported that production has been rising since first gold pour in February. The miner is forecasting gold output of 50,000 ounces at an all-in sustaining cost of US$975 per ounce this year.

Additionally, Reuters reported that a Mexican minister is urging those involved in ongoing stoppages at Newmont’s Penasquito gold mine in Mexico to find a solution. Francisco Quiroga, who is the deputy economy minister responsible for mining, added that he wants operations at the country’s largest gold mine to be up and running.

“Every day that it’s shut, there are millions lost for the company and for public coffers,” Quiroga said.

The asset accounts for about 17 percent of Newmont’s net asset value and was responsible for the production of 272,000 ounces of gold last year alone.

Newmont made the decision to suspend operations at the end of April, citing an illegal blockade by a trucking contractor and some members of the Cedros community as the reason behind the suspension. The company has not provided an update on the situation since the original press release in April.

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