Global Precious MMI: Gold price retraces, palladium outlook strong

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gold price

Olivier Le Moal/Adobe Stock

The Global Precious Monthly Metals Index (MMI) gained 5.3% for this month’s index value, as the gold price surged to start the year but couldn’t hold onto those gains.

January 2021 Global Precious MMI

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Gold price ups and downs

Amid ongoing economic uncertainty, a falling dollar and the coronavirus pandemic, many market watchers are keenly interested in the fortunes of gold.

While numerous analysts predicted gold could reach $2,500 per ounce last year, that didn’t happen.

The gold price did reach as high as $2,034 per ounce in early August, inspiring speculation with respect to how much further the price had to run.

Gold cooled off in the ensuing weeks before heating up again throughout December and early January. The gold price reached $1,957 per ounce during the first week of January before retracing, dropping to $1,828 per ounce as of Jan. 10.

Meanwhile, the U.S. dollar — which generally correlates inversely with the gold price — hit a two-year low back in August (when gold reached its 2020 peak). From the beginning of November to early January, the dollar lost approximately 5% of its value.

However, the dollar has staged a small rally over the last week. The U.S. dollar index fell to 89.44 as of Jan. 5 before bouncing back to 90.47 on Jan. 11.

So what could drive the price this year?

“Physical demand could pick up in 2021,” MetalMiner’s Stuart Burns wrote last month. “China is forecast for potentially double-digit growth in 2021 with a strong tailwind from this year’s stimulus measures and a robust recovery in consumption.

“India, the other major physical gold market, does not look as positive. The country will likely have a slow vaccine rollout and is facing severe banking risks. That could hamper the Indian economy’s recovery in 2021. In turn, a slower recovery could impact consumer appetite for spending, with unemployment up and some sectors still struggling.”

Palladium recovers after Q1 2020 setback

Aside from the gold price, the palladium price rose steadily in 2020 after a Q1 setback.

In fact, the palladium price remains well above the gold price. Palladium crossed the $2,600 per ounce threshold in late February 2020. However, the precious metal suffered steep losses, with the spot price falling over 40% in the span of a month as the coronavirus pandemic worsened around the world.

Among other uses, palladium is prominent in automotive catalytic converters, which help mitigate harmful gases from automotive exhaust.

Palladium hasn’t quite reached its pre-pandemic price just yet, but it opened the year at $2,336 per ounce.

As nations around the world continue with vaccination efforts, travel should recover, particularly automotive travel. After a two-month suspension of production lines from March-May last year, automakers bounced back as the year progressed and consumer demand recovered.

Newmont, joint venture partners announce integration of Alumbrera, Agua Rica operations

Gold major Newmont Corporation announced it and its joint venture partners had successfully integrated the Alumbrera mine, plant and infrastructure with Yamana Gold’s Agua Rica project.

The integration of the projects “finalizes the joint venture between Newmont (18.75%), Glencore International AG (25%) and Yamana Gold (56.25%).”

“Under the MARA Project, Agua Rica will be developed and operated using the existing infrastructure and facilities from the Alumbrera mine, approximately 35 kilometers away,” Newmont added in its announcement. “The integration unlocks significant value by leveraging Alumbrera’s infrastructure including the plant, tailings storage facility, pipeline and other infrastructure to be used for processing ore from Agua Rica.”

Actual metals prices and trends

The U.S. silver price rose 18.0% month over month to $26.66 per ounce as of Jan. 1.

Meanwhile, the U.S. platinum bar price increased by 10.6% to $1,062 per ounce. While the palladium price has continued to show long-term strength, the price traded flat month over month, hitting $2,245 per ounce to start the year.

As for the gold price, Chinese gold bullion jumped 9.0% to $61.70 per gram. Meanwhile, the U.S. gold bullion price rose 6.6% to $1,894.30 per ounce.

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