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Metals Weekly Round-Up: Gold’s Bull Run Sets New All-time High
Gold’s historic rally continued this week, taking the metal into new record-setting territory. It topped US$2,070 per ounce on Thursday (August 6), pulling back overnight as the US dollar gained. The greenback strengthened from a two year low due to heightened purchases amid growing animosity between Washington and Beijing. Despite the renewed momentum, investors continue to choose safe haven gold as COVID-19 cases increase globally.
The yellow metal’s run past US$2,000 marks its ninth straight week of gains. Since March, the price of gold has climbed 36 percent. “The biggest move is in the third leg, which we’ve just entered,” David Morgan of the Morgan Report told the Investing News Network (INN) this week.
He continued, “Gold proved it a couple of days ago — what you have to have is a new nominal high, which we had in gold, and now we’re getting that round number of US$2,000.” Gold was priced at US$2,032.91 as of 11:43 a.m. EDT on Friday (August 7).
Silver was also on track for its sixth consecutive week of gains, adding as much as 27 percent to its value. It edged close to US$30 an ounce on Thursday, a seven year high for the white metal.
During his sitdown with INN, Morgan talked about silver’s trajectory and its relation to sister metal gold. “Silver will catch up in my view, and probably … outperform,” he said.
At 11:40 a.m. EDT on Friday, silver was trading for US$27.92. After ending July under price pressure, platinum saw a week of steady gains. Starting the session at US$902 per ounce, the metal moved as high as US$995 before pulling back to US$965.
Platinum’s recent price growth is likely linked to tight supply stemming from mine shutdowns and curtailments in H1. “The first half of 2020 saw platinum-group metal (PGM) supply decline sharply, especially for platinum,” said CPM Group’s Rohit Savant. “While there were mine supply disruptions at various PGM-mining locations, South Africa was particularly badly hit. South Africa accounts for around 72 percent of global platinum mine supply.”
An ounce of platinum was valued at US$952.50 as of 11:45 a.m. EDT on Friday. Palladium prices also trended higher this week, fortifying above US$2,000 per ounce.
Current supply and demand fundamentals have contributed to palladium’s positive performance, but the metal was already experiencing a prolonged run prior to the pandemic. 2020 mine supply challenges have been less impactful on palladium compared to platinum’s woes.
As Savant explained during a palladium H1 recap, “Palladium was hurt relatively less than platinum because palladium mine supply is more diversified than that of platinum.” He added, “While there were mine supply disruptions at various PGM-mining locations, South Africa was particularly badly hit.”
At 11:46 a.m. EDT on Friday, palladium was moving for US$1,993. The base metals also gained broadly, edging higher throughout the week. On Monday (August 3), copper was priced at US$6,441 per tonne, a range unseen since April 2019.
After slipping to a year-to-date low in March, the red metal has clawed back 39.7 percent. While copper’s gains have been steady since March, prices are still too low to incentivize new projects, according to Robert Friedland of Ivanhoe Mines (TSX:IVN,OTCQX:IVPAF).
“The mining industry has to reinvent itself … it takes a very long time before a rise in price results in a meaningful increase in production of metals,” he said during the Sprott Natural Resource Symposium.
“The copper price probably needs to double its current price for the average low-grade copper porphyry in Peru or in Chile to become viable.” Copper was trading for US$6,453.50 at 10:13 a.m. EDT on Friday.
Zinc also made gains this period, braking past US$2,300 per tonne for the first time since January. Some of zinc’s growth may be associated to a decrease in Shanghai stocks of the metal, which recorded a 4.4 percent decrease this week amid growing demand.
“China’s refined zinc output increased in July as some smelters which had trimmed output due to shortage of zinc concentrate raised production and some smelters recovered from maintenance,” notes Shanghai Metals Market.
On Friday morning, zinc was priced at US$2,377.50. Nickel has spent the first part of August rocketing higher after a slight slip at the start of the month. On Monday, nickel was sitting at US$13,683 per tonne, but it had climbed 5 percent by Thursday.
This week’s gains could be the result of Tesla’s (NASDAQ:TSLA) Elon Musk making public calls for more nickel production. The metal is a key component in electric vehicles, a sector where Tesla is a dominant player. To end the week, nickel was selling for US$14,381.
Lead also squeezed out a gain this for the first full week of August. Prices faced pressure mid-week, slipping below US$1,860 per tonne. The metal quickly recovered and climbed back above US$1,880; by week’s end, lead was valued at US$1,913.