Gold

The Global Precious Monthly Metals Index (MMI) surged 9% for this month’s MMI value.

August 2020 Global Precious MMI chart

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Surging gold price

The gold price recently soared to an all-time high.

The gold price is inversely correlated with the U.S. dollar. As such, it is worth noting the U.S. dollar recently fell to a two-year low.

The U.S. dollar fell to 93.23 as of Thursday afternoon.

Silver rises but could be headed for short-term weakness

Meanwhile, the silver price has also been on the rise longer term.

MetalMiner’s Stuart Burns has kept a close eye on the resurgent silver market in recent months.

“Early this year, the silver market was going through a tough time,” Burns wrote last month.

“Its reaction to the growing pandemic was in stark contrast to that of gold. The disconnect between the two metals rose to historic proportions, as gold rose on the back of deeply negative real interest rates and expectations, justified or otherwise, of rising inflation as a result of massive fiscal stimulus.”

Burns added the silver price could still have a ways to go.

“Silver’s case, apart from it underperforming its historic average, is the potential for it to be boosted by: the growing Chinese recovery driving demand for industrial consumption (particularly electronics and plating), its attractions as a safe-haven investment and supply constraints due to COVID-19 mining-related disruptions in Central and South America,” he added.

“One arbitrage doing the rounds these last few months was to sell gold and buy silver, largely on the historic disconnect between the two prices as gold soared and silver collapsed. But with economic activity improving and supply-side concerns not going away, silver’s continued rise has better prospects, regardless of the trajectory for gold or the fact the historic connection between the two has partially recovered.”

Silver slowdown?

However, the silver price could take a bit of a breather from its upward ascent.

In a followup post Wednesday, Burns explained why silver’s rise has slowed.

“Silver’s rise has been so dramatic over the last 30 days; a pullback is to be expected,” he wrote.

“In fact, silver bulls are said to be looking for short corrections to create more value to add to positions.

“Both gold and silver retrenched yesterday. Gold fell below $2,000/ounce, while silver dropped toward $27/ounce.

“But whether that will be enough to dampen spirits for a push higher in coming weeks will depend on the course of the dollar, indications on post-pandemic recovery and further action by the Fed regarding longer for lower interest rates.”

Palladium, platinum make gains

Gold and silver have made significant gains since the start of the pandemic: what about the rest of the precious metals complex?

Powered in part by recovering automotive sales, both platinum and palladium showed some life.

Palladium, for example, trended largely sideways from March through June. However, over July, the palladium bar price jumped over 5%.

It remains to be seen if the automotive market will continue in its recovery. As noted in the Automotive MMI report earlier this month, July automotive sales in the U.S. saw the recovery take a bit of a pause.

Automotive sales in China, meanwhile, have proved more consistently resilient.

According to China Association of Automobile Manufacturers (CAAM) data released July 13, June sales rose 11.6% year over year. The July sales figure marked the third consecutive month of year-over-year sales gains in China.

The three-month positive streak followed a March year-over-year decline of 43.3%.

Actual metals prices and trends

The U.S. silver price gained 34.5% month over month to $24.47/oz as of Aug. 1.

The U.S. platinum bar price gained 9.9% to $900/oz. Meanwhile, the palladium bar price jumped 5.3% to $1,973/oz.

The U.S. gold bullion price gained 11.0% to $1,976.10/oz. The Chinese gold bullion price jumped 8.5% to $61.39/gram.

See why technical analysis is a superior forecasting methodology over fundamental analysis and why it matters for your metals buy.

gold price rising

Are gold prices really going to keep rising? Source: Adobe Stock/Nikonomad.

This morning in metals news: the gold price has surged to an all-time high; China is eyeing changes to its steep capacity swap rules; and Northern Dynasty Minerals has received an environmental impact study for its Pebble copper-gold-molybdenum project in Alaska.

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USMCA

ronniechua/Adobe Stock

This morning in metals news: the United States International Trade Commission asked for an additional $2.75 million in its budget to help it toward implementation of the United States-Mexico-Canada Agreement (USMCA); the World Gold Council released its H1 2020 report; and U.S. beverage makers are grappling with an aluminum can shortage.

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The Global Precious Monthly Metals Index (MMI) gained 1.7% for this month’s reading.

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athitat/Adobe Stock

This morning in metals news, the Bureau of Economic Analysis (BEA) released its third estimate vis-á-vis Q1 GDP growth, a power outage impacted Norsk Hydro’s Paragominas operation in Brazil and gold prices have surged to an eight-year high.

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The Global Precious Monthly Metals Index (MMI) gained 1.7% this month.

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scharfsinn86/Adobe Stock

This morning in metals news, aluminum maker Norsk Hydro recently announced the formation of a joint venture that will aim to recycle electric vehicle batteries, the Aluminum Association reiterated its stance on the need for an aluminum import monitoring system and a Dutch bank says gold prices are expected to drop.

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misunseo/Adobe Stock

Before we head into the weekend, let’s take a look back at the week that was and some of the metals storylines here on MetalMiner, including coverage of: automotive sales, U.S. construction spending, aluminum prices on the SHFE and LME, and gold’s growing premium over silver.

Looking for metal price forecasting and data analysis in one easy-to-use platform? Inquire about MetalMiner Insights today!

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The Global Precious Monthly Metals Index (MMI) dropped 1.7% this month.

Gold prices steady around $1,700/ounce

With some states beginning to reopen and ease restrictions put in place to curb the spread of COVID-19, interest in gold as a safe-haven asset has picked up.

After falling below $1,500 per ounce in March, the gold price eventually surged ahead of the $1,700 per ounce threshold, around which it has settled since mid-April.

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As Kitco News reported, the gold price did not react in any significant way to the recent stretch of historic unemployment claims in the U.S. — nonfarm payroll employment fell by 20.5 million in April alone, the Bureau of Labor Statistics reported — because the news was largely expected.

It remains to be seen how various states’ plans to “reopen” their economies will progress given the still-elevated number of cases and deaths in some regions of the country.

This week, however, Bloomberg reported the VIX, or volatility index, fell to a nine-week low. The VIX dropped below 30 for the first time since March 3, Bloomberg reported.

Meanwhile, CBOE’s Gold ETF Volatility Index (GVZ) was down Friday, falling to 25.62 as of Friday afternoon after opening today at 26.76. The GVZ reached as high as 54.37 this year (March 18).

Silver linings

Elsewhere in the precious metals basket, MetalMiner’s Stuart Burns delved into the recent surge in the gap between gold and silver prices.

In short? Investor interest in silver ETFs has gotten a boost.

“The Financial Times reports on the dramatic rise in silver ETF holdings as investors bet on a rally in silver after the gap between gold and the industrial metal soared to its widest level in more than three centuries,” Burns wrote.

“The article states that in March the price of an ounce of gold was 125 times higher than the same amount of silver — a record going back to at least 1687.

“Since then, the gap has closed to about 113 times, as silver rose to $15 per ounce; Bank of America is reported as predicting silver could top $20 over the next year.”

Top gold miners post strong Q1

Miner Newmont Corporation reported first-quarter gold production of 1.48 million ounces, up 20% from Q1 2019, “primarily due to new production from the Goldcorp assets, partially offset by the sale of Kalgoorlie in Australia and lower ore grade milled at Ahafo, Yanacocha and Merian.”

Newmont benefited from rising gold prices (gold is up approximately 12% since the start of this year).

“Average realized price for gold was $1,591, an increase of $291 per ounce over the prior year quarter; average realized price for copper was $1.56, a decrease of $1.33 per pound over the prior year quarter; average realized price for silver, lead and zinc were $14.13 per ounce, $0.64 per pound and $0.62 per pound, respectively,” Newmont said in its Q1 earnings report.

Meanwhile, Barrick Gold Corporation posted Q1 net earnings of $400 million, up from $111 million in Q1 2019.

In operational news, Barrick is currently in a dispute with the government of Papua New Guinea over its decision not to extend the lease for the Porgera gold mine. The open pit, underground gold mine is a joint venture operated by Barrick (47.5% stake), Zijin Mining Group (47.5%) and Mineral Resources Enga (5%).

“Since the end of the quarter, the government of Papua New Guinea has announced that it will not renew Barrick Niugini Limited’s 20-year Special Mining Lease for the Porgera gold mine,” Barrick said in its earnings report. “Barrick has said it will contest the move, which it regards as tantamount to nationalization without due process. In the meantime, BNL has placed Porgera on temporary care and maintenance. In addition, due to the uncertainty related to the timing and scope of future developments on the mine’s operating outlook, we are withdrawing our full year 2020 guidance for Porgera at this time.”

Reuters: BAML forecasts platinum, palladium deficits

Reuters reported Bank of America Merrill Lynch analysts forecast a global deficit in platinum and palladium this year as a result of mine closures in top platinum producer South Africa.

Last month, South African President Cyril Ramaphosa announced the extension through the end of April of lockdown measures aimed at curbing the coronavirus outbreak.

Earlier this month, however, the government began to ease restrictions, allowing for some stores to reopen (mines had already been permitted to operate at 50% as of late last month).

“Yet, while a nation-wide lockdown is probably the most effective means to contain the spread of the coronavirus, it cannot be sustained indefinitely,” Ramaphosa said April 25.

“Our people need to eat. They need to earn a living. Companies need to be able to produce and to trade, they need to generate revenue and keep their employees in employment.

“We have accordingly decided that beyond Thursday 30 April, we should begin a gradual and phased recovery of economic activity.”

Anglo American Platinum reported a 7% decline in PGM production in Q1, down to 954,800 ounces, citing South Africa’s COVID-19 mitigation measures.

Meanwhile, Impala Platinum reported a 6% drop in production for the first quarter of calendar year 2020.

“The implementation of the lockdown is estimated to have resulted in a 6% reduction in reported milled tonnage from each of Impala, Marula and Two Rivers, equivalent to approximately 26,000 ounces of 6E mine-to-market concentrate production during the quarter,” Impala said in its quarterly report.

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Actual metals prices and trends

The U.S. silver ingot/bars price rose 9.7% month over month to $15.27/ounce as of May 1.

The U.S. platinum bar price rose 7.6% to $778/ounce, while palladium fell 17.9% to $1,870/ounce.

Chinese gold bullion rose 6.3% to $53.63/gram, while U.S. gold bullion surged 8.7% to $1,714.10/ounce.

zerophoto/Adobe Stock

This morning in metals news, Novelis Inc. reported fiscal year 2020 net income fell 3%, ArcelorMittal has opted to suspend dividend payments and Barrick Gold has benefited from the gold price’s rise this year.

Looking for metal price forecasting and data analysis in one easy-to-use platform? Inquire about MetalMiner Insights today!

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