Global Precious MMI: Gold price briefly surges above $1,700/oz amid coronavirus fears

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The Global Precious Monthly Metals Index (MMI), which tracks a basket of precious metals, rose four points this month for an MMI reading of 129.

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Gold prices surge

Unsurprisingly, gold prices have gained upward momentum amid the novel coronavirus (COVID-19) outbreak and governments’ ensuing efforts to control its spread.

Earlier this week, the gold price soared past the $1,700/ounce threshold before closing Monday at $1,679.60/ounce and falling to just below $1,650/ounce late Tuesday.

Earlier this month, MetalMiner’s Stuart Burns opined on the gold market.

“Chartists will say gold remains on a bull run,” Burns wrote. “Gold tailed off in Q4 on the back of a perceived easing in trade fears, but such comfort has paled in the harsh glare of Covid-19’s impact.

“Falling interest rates and negative bond yields are not helping stock market sentiment but they are music to the ears of gold bulls, who see the rising cost of food products and shortages caused by supply chain disruption adding to a toxic mix of challenges that does not bode well for markets in the first half of the year.

“What transpires further out is another story.”

Infection rates in China are reportedly falling; President Xi Jinping visited Wuhan, the Chinese city at the epicenter of the outbreak, this week.

However, it remains to be seen how effectively governments around the world will be able to curb the spread of the virus. After locking down provinces in northern Italy, the Italian government this week announced a countrywide lockdown aimed at controlling the spread of the novel coronavirus.

As of 4:00 p.m. Central European Times (CET) on Tuesday, the World Health Organization reported 113,851 confirmed cases worldwide, including 4,015 deaths.

In the U.S., the Centers for Disease Control and Prevention (CDC) reported 647 total cases and 25 deaths as of Tuesday.

“Volatility is going to remain the order of the day as markets swing to any news on the spread of the virus and of the hit economies or industries are taking from the supply chain disruption,” Burns added.

“For the time being, gold bulls will maintain their preferred metal remains a good investment.”

Newmont board approves investment in Autonomous Haulage System

U.S.-based gold mining heavyweight Newmont Corporation announced last month its board of directors had approved investment in a new Autonomous Haulage System (AHS) for its Boddington mine in Australia.

Newmont said the move would enhance “safety and productivity” at the mine while also extending the mine’s life.

“Once fully operational in 2021, Boddington will be the world’s first open pit gold mine with an autonomous haul truck fleet,” Newmont said in a press release.

The Boddington mine is Western Australia’s largest gold producer, delivering 709,000 ounces of gold and 77 million pounds of copper in 2019, Newmont noted.

Newmont gold production increased 23% in 2019 to 6.3 million ounces, the company said in its Q4 and full-year 2019 financial reporting. Newmont’s Q4 gold production increased 27% year over year to 1.83 million ounces.

For 2020, the company forecast attributable gold production will come in at around 6.4 million tons, with production expected to fall in the range of 6.2 million and 6.7 million tons per year through 2024.

BASF announces innovation aimed at substituting higher-priced palladium for platinum

BASF, in collaboration with Sibanye-Stillwater and Impala Platinum, announced Tuesday it has developed and tested a new Tri-Metal Catalyst that will allow for substitution of more costly palladium for platinum.

“Adoption of the Tri-Metal Catalyst can reduce catalytic converter costs for automakers and partially rebalance market demand for PGMs, thereby enhancing PGM market sustainability,” BASF said in a release.

Palladium continues to trade at a significant premium to platinum, powered by a palladium market deficit and surging demand coming from the automotive industry, as palladium is used in catalytic converters to curb emissions.

“The increase in the palladium demand is in large part being caused by a market imbalance from tightening emission regulations in China, Europe and India, and a market shift from light-duty diesel to light-duty gasoline vehicles in Europe,” BASF said in its announcement. “This is resulting in higher costs for automakers.”

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Actual metal prices and trends

The U.S. silver price fell 7.7% month over month to $16.63/ounce as of March 1.

The U.S. platinum price fell 9.8% to $864/ounce, while the palladium price surged 13.7% to $2,489/ounce.

Before a surge that took the gold price past the $1,700/ounce barrier, the U.S. gold bullion price reached $1,585.50/ounce as of March 1, flat compared with the price a month prior.

The Chinese gold bullion price was down 0.3% to $51.26/gram.

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