Precious Metals Weekly Round-Up: Prices Rally as Trade Talks Deteriorate

The gold price began to stabilize Friday (November 29) after spending the majority of the week slipping. The yellow metal is on track to record its worst month in three years, losing as much as US$58.60 per ounce since the beginning of November.

The 18 month tariff stalemate has added volatility to the precious metals market, with gold seeing the greatest impact.

The White House backing pro-Hong Kong protester legislation passed by Congress last week will likely only add tension to an already overwrought discussion.

The bill, which was signed by US President Donald Trump earlier this week, prohibits the sale of US-developed crowd management technologies, such as rubber bullets and tear gas, to Hong Kong police. A second bill declares the US must review Hong Kong annually to ensure they are sufficiently autonomous from China or Hong Kong’s special status for trading will be taken away, damaging China, which does much of its business through Hong Kong.

“I signed these bills out of respect for President Xi, China, and the people of Hong Kong. They are being enacted in the hope that Leaders and Representatives of China and Hong Kong will be able to amicably settle their differences leading to long term peace and prosperity for all,” wrote the president in his statement.

Beijing immediately voiced its disdain for the laws and warned of countermeasures.

“This is a severe interference in Hong Kong affairs, which are China’s internal affairs. It is also in serious violation of international law and basic norms governing international relations,” the Foreign Ministry said in a statement. “This Act will only further expose the malicious and hegemonic nature of US intentions to the Chinese people.”

Concern that gains made in relation to trade negotiations were now thrown to the wayside helped gold rally on Friday morning to trade at US$1,459.68 at 10:21 a.m. EST.

Silver and platinum have also trended lower over the 30 day period. Gold’s sister metal has lost just over US$1 per ounce for the month, locking it into the US$17 range, while platinum has dropped roughly US$50 since November 1.

An ounce of silver was selling for US$16.95 at 10:25 a.m. EST on Friday.

Platinum has been supported by higher ETF activity. However, the metal spent the first 20 days of the period falling from US$948 per ounce to US$899 and has not regained the losses.

According to a recent report from the World Platinum Council, global demand is expected to fall 10 percent in 2020, which will not be offset by a 1 percent supply reduction, prompting concern that the price could fall over Q1 2020.

“Overall, we’d need another year of substantial investment interest in 2020 just to keep platinum prices propped up. Shrinking usage in autocatalyst demand and weak industrial usage numbers will continue to place prices under pressure, despite a small pullback in supply,” wrote Matthew Piggott, head of metals and mining research at S&P Global Market Intelligence.

The value of platinum sat at US$899 at 10:24 a.m. EST on Friday.

Palladium is the only metal to have performed well over the 30 days, starting the month at US$1,792 per ounce and trading for US$1,822 today.

With continued gains, palladium is closing in on gold’s all time high of US$1,900 set in 2011.

Stricter environmental regulations around gasoline powered car emissions have driven palladium prices over the year, with China announcing it would increase the amount of palladium used in emission reducing catalytic converters by 30 percent.

The metal has been the most successful precious commodity in 2019, gaining US$534 an ounce since starting the year at US$1,287.

Growing demand from the automotive sector coupled with limited supply has helped palladium hit three record highs this year, keeping it on track to outperform gold’s previous highs.

Palladium was trading for US$1,804 an ounce as of 10:26 a.m. EST on Friday.

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