Global Precious MMI: Gold retraces as dollar firms, long-term treasury yields rise

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gold price

Olivier Le Moal/Adobe Stock

The Global Precious Monthly Metals Index (MMI) dipped 0.7% for this month’s index value, as gold prices have continued to slide.

March 2021 Global Precious MMI chart

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Gold price dips below $1,700/oz

Amid economic uncertainty and turbulence, many turn to traditional safe-haven assets like gold.

However, the gold price has been on the decline since August.

The gold price reached an August peak of $2,035 per ounce. The price fell below $1,800 around Thanksgiving before recovering to around $1,950 at the start of the year.

Since then, gold has come back down, falling to $1,698 per ounce on Monday.

US dollar regains some strength; treasury yields gain

The US dollar and the gold price are generally inversely correlated.

As such, the US dollar has shown some strength of late.

The dollar index reached 92.30 on Monday and is up 2.64% in the year to date.

In other indicators of strength, the 30-year treasury yield reached 2.31% on Monday, up from 1.66% to start the year. Meanwhile, the 10-year yield reached 1.59% on Monday, up from 0.93% to start the year.

Meanwhile, as we’ve noted previously, other factors potentially weighing on gold include adoption of cryptocurrency by some investors. While Bitcoin’s volatility is significant, the price has surged this year. Bitcoin reached $53,806 to start the week, down from the all-time peak of $57,489 reached late last month. However, Bitcoin is still up 83% on the year.

Automotive precious metals continue to surge

Prices for precious metals used in automotive applications continue to rise — to the chagrin of automotive manufacturers.

Rhodium, for example, used in catalysts that deal with emissions, continues to surge. After reaching $16,000 per ounce in late January, the price reached $25,800 per ounce Monday, or up approximately 61%.

Meanwhile, palladium’s gains have not been as significant, but the price remains elevated. At $2,234 per ounce on Monday, the palladium price is up 47% since its 2020 trough in late March 2020.

In an interview with the Financial Times, Nissan Chief Operating Officer Ashwani Gupta cited the challenge of rising raw material prices, particularly precious metals.

Sibanye-Stillwater reports six-month results

South African miner Sibanye-Stillwater last month reported its results for the six-month period ending Dec. 31, 2020.

The firm’s profit jumped to $1.78 billion, up from $5 million during the same period in 2019.

In its 4E PGM category in South Africa — rhodium, platinum, palladium and gold — production reached 918,679 ounces, down from 980,343 ounces the previous year.

Meanwhile, 2E PGM output in the US — that is, platinum and palladium — totaled 305,327 ounces, down from 309,202 ounces.

“2020 was a defining year for the Group, marking the end of the deleveraging phase that has prevailed over the past three years,” Sibanye-Stillwater CEO Neal Froneman said. “Despite the significant challenges associated with the COVID-19 pandemic, the Group delivered a record financial performance and made notable progress towards delivery on many strategic targets.”

Newmont reports production results

In other production news, top gold miner Newmont Corporation reported fiscal year 2020 net income of $2.14 billion, up from $970 million the previous year.

Furthermore, Newmont’s attributable gold production fell to 5.91 million ounces, down from 6.29 million ounces the previous fiscal year.

Gold production fell due to “Yanacocha and Cerro Negro being placed into care and maintenance in response to the Covid pandemic, lower ore grade mined at Ahafo and the sale of Red Lake and Kalgoorlie, partially offset by a full year of operations from assets acquired in April 2019,” the miner said.

Actual metals prices and trends

The US silver price dipped 1.0% month over month to $26.70 per ounce as of March 1.

The US platinum bar price rose to 10.8% to $1,181 per ounce. Meanwhile, the US palladium bar price rose 3.2% to $2,229 per ounce.

The Chinese gold bullion price fell 6.4% to $56.45 per gram. The US gold bullion price fell 6.1% to $1,736 per ounce.

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