Global Precious MMI: Gold price retreats, US dollar strengthens

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The Global Precious Monthly Metals Index (MMI) fell by 0.7% for this month’s reading.

August 2021 Global Precious MMI chart

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Gold price slides

gold price

Olivier Le Moal/Adobe Stock

After showing strength in April and May, the gold price has continued to slide in June and July.

The U.S. gold bullion price closed July at just over $1,800 per ounce after closing the previous month at around $1,844 per ounce.

Meanwhile, the U.S. dollar, which typically moves inversely to gold prices, has gained strength in recent months. After dipping below 89 in late May, the U.S. dollar has picked up steam, closing Wednesday at 93.

Fed holds off on rate increases

In monetary policy, as we noted late last month, the Federal Reserve said it will hold off on rate increases for the time being.

“The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time,” the Fed said.

While the economy has recovered, the Fed said the sectors most adversely affected have not fully recovered.

“Inflation has risen, largely reflecting transitory factors,” the Fed added. “Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.”

The Consumer Price Index for All Urban Consumers increased by 0.5% in July, the Bureau of Labor Statistics reported. The CPI had jumped by 0.9% the previous month.

Furthermore, the all items index is up by 5.4% over the last 12 months, reflecting surging costs for consumers.

Newmont reports quarterly results

Newmont Corporation announced adjusted EBITDA of $1.6 billion in the second quarter. Net income increased by $228 million from the previous year to $640 million.

The miner’s attributable gold production increased 15% year over year to to 1.45 million ounces. Higher output came as a result of higher production from sites that were placed into care and maintenance or experienced reduced operations in response to the COVID-19 pandemic during 2020. The miner also cited higher ore grade milled and higher mill throughput at Boddington.

However, the increases were partially offset by lower mill availability and lower tons and grades mined at Nevada Gold Mines. The miner also cited the ramp down of the mill at Yanacocha during Q1 2021 and a “build-up of in-circuit inventory at Tanami as the mine was placed under care and maintenance in late-June as a result of Covid restrictions.”

Despite the recent retrenchment of gold prices, the miner benefited from stronger prices through most of the quarter. Newmont reported an average realized gold price of $1,823, or up $99 per ounce over the prior year quarter.

Sibanye-Stillwater reaches agreement to acquire nickel processing facility

Touting it as the next step in the progression of its “battery metals strategy,” South African palladium and platinum producer Sibanye-Stillwater said it reached an exclusive put option agreement with French mining group Eramet SA for the acquisition of 100% of the Sandouville nickel hydrometallurgical processing facility. The effective cash cost for the facility in Normandy, France, is €65 million.

“The Sandouville facility is ideally located close to the European end-user markets and well supported by significant logistical infrastructure, which will allow us to leverage our existing Platinum Group Metals relationships,” CEO Neal Froneman said. “We look forward to working with Eramet and the French authorities to build a leading battery metals platform in Europe.”

Actual metals prices and trends

The U.S. silver price dipped by 2.5% month over month to $25.46 per ounce as of Aug. 1. Meanwhile, the U.S. platinum bars price fell by 2.0% to $1,043 per ounce. The palladium bar price fell 4.0% to $2,600 per ounce.

The Chinese gold bullion price rose 1.9% to $58.40 per gram. Meanwhile, the U.S. gold bullion price jumped by 2.4% to $1,813 per ounce.

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