Investors have been drawn away from the yellow metal as the US dollar and bond yields move higher.
Gold spent another week slipping lower, nearing a nine month low on Friday (March 5). Investors have been drawn away from the yellow metal as the US dollar and bond yields move higher.
The case for gold didn’t benefit from the US Federal Reserve’s Thursday (March 4) decision to stay the course, keeping the key interest rate at 0 percent, the same level exhibited in late 2008.
The rest of metals fared the same for the first week of the month, with palladium registering the only gain as markets opened on Friday morning.
The gold price started the month of March at US$1,735 per ounce and steadily trended lower throughout the week. It slipped below US$1,700 for the first time since June 2020.
A reversal in the gold exchange-traded fund (ETF) space in February led to a third month of outflows in that space. Global gold ETFs shed 84.7 tonnes during the second month of the year, the seventh worst month for losses historically.
Despite the decline in the gold price, Peter Grandich of Peter Grandich & Company expects more upside in the future. “The gold market may be in the fourth or fifth inning of a nine inning game, and I think we’re pretty close to the end of the correction,” he told the Investing News Network. “I would say the risk is US$100 down and the reward is US$500 to US$1,000 up.”
Watch Grandich discuss the gold market, as well as the uranium and copper sectors.
Gold was trading at US$1,698.44 as of 10:40 a.m. EST on Friday.
Following a month of slowly edging higher, March has seen silver pull back. Correlations to gold have weighed on the white metal, but healthy industrial demand and investor interest has allowed the metal to hold above US$25 per ounce. Silver was priced at US$25.02 at 11:08 a.m. EST on Friday.
Platinum prices peaked at a six year high to start the session, breaching US$1,212 per ounce. The level proved unsustainable, and the metal spent the rest of period contracting. Dipping as low as US$1,108 on Thursday, prices have begun to ascend since then.
As mentioned, palladium is the only metal on course to end the week in the green.
Its modest 0.5 percent gain took values from US$2,261 per ounce to US$2,274 over the five day period.
Supply and demand fundamentals continue to benefit the automotive metal. Still off its all-time high of US$2,614, achieved in January 2020, the metal is expected to be supported by demand in the auto sector.
At 11:19 a.m. EST on Friday, platinum was selling for US$1,113.30, while its sister metal palladium was valued at US$2,257.
Copper prices marked a 10 year high in February, moving north of US$9,000 per tonne for the first time since 2011. The price has since consolidated to the US$8,700 range.
Prices for the red metal could see a bump in the coming months as the metal’s antiviral properties are promoted. Any uptick in demand could lead to a potential deficit as supply remains tight.
“The argument for copper is there’s been such a neglect of seeking it, and the deposits that are out there are high CAPEX, high cost (and) in areas of the world that are not the best places to work anymore,” Grandich explained in his conversation with the Investing News Network.
“There’s going to be a real need to spend a lot of money, and it’s not something you can just start tomorrow and have it available in a few days, a few weeks or a few months.”
Copper was priced at US$8,786 per tonne as of Friday morning.
Nickel prices fell off a cliff during the first week of March, dropping 13.4 percent. Despite the double-digit decline, the price could see tailwinds in the near future. Operations at the Fénix nickel mine in Guatemala were suspended following concerns over the environmental impact of its operations.
The mine, which is privately owned by Solway Investment Group, is part of the firm’s ProNiCo operations. The company will try to source nickel ore for processing from other projects in the area.
“It remains to be seen how feasible it will be to source ore from local mines, although it is likely that the ProNiCo operation will be able to process accumulated feedstock in the near term,” notes a Roskill report. “The operation currently supplies ferronickel to stainless steel mills overseas and China accounted for an estimated two thirds of Guatemala’s ferronickel exports in 2020.”
Nickel was being sold for US$16,144 per tonne on Friday.
Zinc and lead also shed some of their February gains this session, although their losses were modest compared to nickel’s dramatic decline.
Zinc ended the week at US$2,734.50 per tonne, while lead sat at US$2,014 per tonne.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.