Precious Metals Weekly Round-Up: Gold Steadies as Dollar Dips

Both gold and silver inched up slightly on Friday (July 27), after the greenback slid due to in-line US growth report.

However, the precious metals still remained on a decline as gold headed for a one-week low and the white metal moved toward its seventh weekly decrease, thanks to an agreement between the United States and Europe which eased trade war fears.

As of 10:39 a.m. EST, the yellow metal was trading at US$1,223.70 per ounce, while silver was trading at US$15.49 per ounce as of 10:41 a.m. EST.

Despite the US dollar slinking on Friday, it hit five-day highs earlier in the week and continues to keep the metals down.

“[Gold] is tracking the dollar, but the closest correlation right now is between gold and the yuan,” said Ole Hansen, head of commodity strategy at Saxo Bank.

“Apart from that gold may also be [tracking] the potential impact a strong [US GDP] read could have for interest rates and the dollar,” he added.

Hansen also noted that the precious metals are “hostage” to trade war issues and currency threats.

Both platinum and palladium were up on Friday but down for the week, trading at US$828 per ounce and US$924 per ounce respectively as of 10:52 a.m. EST.

Precious metals top news stories

Our top precious metals stories this week featured Fresnillo’s (LSE:FRES) impressive second quarter silver production results, Zimbabwe making its Platinum Group Metals (PGM) deal with Karo Platinum official and Sibanye-Stillwater (NYSE:SBGL, JSE:SGL) completing its US$500-million gold-palladium deal with a subsidiary of Wheaton Precious Metals (TSX:WPM, NYSE:WPM).

1. Fresnillo’s Silver Production Rises in Q2

The world’s largest silver producer Fresnillo’s (LSE:FRES) reported that its second quarter silver production jumped 5.7 percent year-on-year and 1.6 quarter-on-quarter, thanks to higher volume of ore processed at Saucito and the higher grades at Ciénega and San Julián mines.

The Mexican-based company currently has seven mines in operation, which has allowed the company to produce 15.34-million ounces of the precious metal in the second quarter, taking half-year output to 30.76-million ounces.

“I am pleased to report a robust production performance in the first half. In line with our strategy, we continue to actively manage and strengthen our asset portfolio. In particular, during the period we have successfully ramped up our new San Julián JM mine to full capacity, which has made a significant contribution to overall production,” explained CEO Octavio Alvídrez.

2. Zimbabwe Makes PGMs Partnership with Karo Official

Zimbabwe and miner Karo Platinum officially launched their US$4.2-billion platinum project, which aims at increasing long-term sustainability of PGM production within the South African country.

Success of this joint venture between Zimbabwe’s government and the platinum miner could see PGMs production reach 1.4 million ounces annually, as well as the construction of a refinery, which could produce approximately 2 million ounces of PGMs a year.

“We are excited about partnering with Zimbabwe and its people in building a long-term and sustainable business,” said Karo chairperson Loucas Pouroulis.

3. Sibanye Closes US$500-million Gold-Palladium Deal

Sibanye-Stillwater (NYSE:SBGL, JSE:SGL) completed its US$500-million upfront cash payment deal through a streaming agreement with a subsidiary of Wheaton Precious Metals (TSX:WPM, NYSE:WPM).

In a Wednesday (July 25) press release, Sibanye announced that it has officially completed the gold and palladium stream agreement with Wheaton and will now put the funds towards reducing its leverage, improving capital structure and reducing financing costs.

“We will apply the upfront amount of funds from the stream to reduce our leverage to well below both the current covenant (3.5x) and future covenant (2.5x) ratio by reducing the net debt. Reducing our leverage is in line with our short term strategic goals,” Henrika Ninham, investor relations manager at Sibanye told the Investing News Network (INN).

Also in the news

Also making news this week is Randgold Resources (LSE:RRS) and how it on track to beat its target guidance for the year.

Randgold revealedthat gold production at the Kibali mine is on track to beat its guidance of 730,000 ounces for the year, thanks to its automated underground operation.

“Kibali hosts one of the world’s largest underground gold mines and the aim of owner mining is to give us complete control over the day-to-day operations, with everyone focused on the same goal and compliance with the mining plan.  We’re confident that we’ll achieve the same results here as we did at Loulo, but we’ve tweaked that model a little to take into account the lessons we learned there as well as Kibali’s specific circumstances,” said Mark Bristow, chief executive.

“We’ve also brought in personnel who were involved in the Loulo transition to support Kibali’s Congolese workforce with the transition,” he added.

Finally, Lonmin (LSE:LMI) announced that it mined 2.6-million tonnes of ore for the quarter ended June 30, which is a 3.1 percent year-on-year decrease, mostly due to the planned reduction in mining from Generation 1 shafts in order to reduce high-cost production in a low-cost industry environment.

The miner reported that concentrator recoveries continue to be excellent, improving to 87.4 percent in the third quarter of the current financial year, up from 86.8 percent this time last year.

Platinum group metal (PGM) sales increased by 2 percent to 352,128 ounces for the quarter but platinum sales decreased by 2.3 percent to sit at 176,121 ounces.

“The smelters are running normally and we are on track with the planned release of stock that was previously locked up in the smelter. We maintain our full-year sales guidance of 650,000 to 680,000 platinum ounces,” Lonmin said.

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