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The gold market is spinning its wheels, caught in a stalemate, which could create some profit-taking among investors and weigh on prices in the near term, noted mining audiences manager Michael McCrae.
On Saturday McCrae recorded Kitco Roundtable.
Heading into the weekend, markets continue to digest the disappointing nonfarm payrolls numbers. The U.S. economy created 175,000 jobs last month, according to the Bureau of Labor Statistics. The monthly figure missed expectations as economists were looking for job gains of 238,000.
At the same time, the unemployment rate increased, and wages didn’t rise as much as expected.
This was initially good news for the gold market, and prices briefly popped; however, in a fatigued market, many traders used the rally to sell. The gold market has managed to hold support above $2,300 an ounce, but it is ending the week with a roughly 1% loss.
After its massive $400+ rally, the gold market continues to consolidate and trend lower as sentiment normalizes. The focus again turns to the Federal Reserve’s monetary policy and interest rates.
According to analysts, gold investors need more clarity from the Federal Reserve as a rate cut this summer becomes increasingly unlikely.
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Given higher than expected inflation print this week, the Federal Reserve is less likely to lower interest rates.
On Friday mining audiences manager recorded Kitco Roundtable.
Gold investors could see higher volatility next week as the Federal Reserve is expected to signal it will not be ready to lower interest rates before the summer.
The weakness comes as the Federal Reserve’s preferred inflation gauge – the core Personal Consumption Expenditures (PCE) index – showed that inflation remains higher than preferred, rising 2.8% over the prior year in March, above estimates for 2.7%
On Wednesday the Fed will make an interest rate announced followed by a press briefing by U.S. Federal Reserve Chair Jerome Powell.
Mid week Bloomberg reported that BHP Group has made an unsolicited offer for Anglo American.
BHP Group is the world's largest diversified miner with a market cap of about $150 billion.
The deal could equal $39 billion making it one of the largest mining deals in decades. BHP is interested in Anglo American's copper assets. Anglo American is expected to produce 730–790 kt of copper in 2024 mostly due to operations in Chile and Peru.
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With Middle East conflict unwinding, a focus on the Fed could slow gold's momentum.
On Saturday mining audiences manager Michael McCrae recorded Kitco Roundtable.
For now, the Israel-Iran conflict seems to have tamped down, which removes some safe-haven demand for gold and puts renewed focus on the Federal Reserve’s monetary policy.
This week Federal Reserve Chair Jerome Powell surprised markets with a brief hawkish comment. While speaking at an event in Washington, D.C., Powell said that after the release of hotter-than-expected inflation data, the central bank has less confidence it is ready to cut interest rates. A June rate cut is basically off the table, and markets only see a 50/50 chance of a July rate cut.
In mining news the Biden Administration denied the building of an access road to Triology Metals' base metals project in central Alaska. The the Upper Kobuk Mineral Projects is a joint venture with South32 50/50. Triology dropped about 25% for the week.
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Gold jumped another 5% this week with June gold futures hitting $2,350 an ounce.
On Saturday mining audiences manager Michael McCrae recorded Kitco Roundtable.
Copper was also on fire, which were up 4.6% for the week to close above $4.20.
The copper miners are up 20% year to date and trading at a 52 week high. Gold miners are up just 10% year to date, according to the GDX.
U.S. job growth blew past expectations in March and wages increased at a steady clip. However the strong job numbers suggest that the Federal Reserve will put off a rate hike to later this year.
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Metals could get a lift with the Fed signaling that it wants to cut interest rates, note mining audiences manager Michael McCrae.
On Saturday McCrae recorded Kitco Roundtable.
Gold ended the week flat with spot at $2165.The metal did spike mid-week. The Federal Reserve has given the all-clear to gold after signaling it still wants to cut interest rates three-times this year, even as inflation remains above the 2% target.
In mining news Calibre Mining (TSX: CXB) announced a C$100 million bought-deal financing at a price of $1.68 per common share of Calibre. Calibre is a mid-tier gold producer with operations in Newfoundland & Labrador in Canada, Nevada and Washington in the U.S., and Nicaragua.
Digging Deep: https://www.buzzsprout.com/2326395
Green Rush: https://www.buzzsprout.com/2326398 -
Copper gained nearly 6% this week to trade above $4 pound, noted mining audiences manager Michael McCrae.
On Saturday McCrae recorded Kitco Roundtable.
Copper got a boost with news that potentially less metal will be available. According to Reuters, China announced that it was cutting production at some loss-making copper smelters. Copper bulls see years of low prices along with diminishing production as a good sign for the metal when the energy transition theme fully kicks in.
The lithium sector looked bullish with big financings announced. Lithium Americas received a record $2.2 billion loan from the US Department of Energy (DOE) to finance the construction of processing facilities at Thacker Pass in Nevada. Liontown Resources (ASX:LTER) announced this week a A$550 million debt facility to fund the company's Kathleen Valley lithium project through first production and ramp-up to the 3Mtpa base case.
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Gold's run is having limited benefit for gold miners, noted mining audiences manager Michael McCrae.
On Saturday, McCrae recorded Kitco Roundtable.
After an impressive seven-day rally, which pushed prices to an all-time high of $2,203, the gold market could see some consolidation in the near term, writes editor Neils Christensen. Profit taking and the lack of any near term catalysts could dampen gold's run going forward.
Gold's run has had muted impact upon gold equities. Although gold companies are up 9% this month, they are still down for the year and more than half their all time high early last decade.
According to a report by Reuters, the Romanian government said on Friday it won an arbitrage trial filed by Canada's Gabriel Resources (GBU.V). The company planned to build Europe's largest open pit gold mine in the western Romanian town of Rosia Montana.
Gabriel Resources had sought at least $4.4 billion in damages from Romania.
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Both copper and gold were higher this week with signs that the Fed may be easing as soon as June.
On Saturday mining audiences manager Michael McCrae recorded Kitco Roundtable with correspondent Paul Harris.
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Gold recovered after tumbling mid week due to a hotter than expected CPI number, noted mining audiences manager Michael McCrae.
On Saturday McCrae and Kitco correspondent Paul Harris recorded Kitco Roundtable.
On Tuesday the Labor Statistics said that its Consumer Price Index rose 0.3% in January, higher than the Consensus forecasts of 0.2% increase. Markets tumbled and gold dropped below the 2000 level.
The week started with a tragic mine accident in Turkey. SSR Mining suspended production at its Copler mine after a landslide resulted in at least nine miners missing.
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New Gold announced a big production update this week, noted mining audiences manager Michael McCrae.
On Saturday, McCrae recorded Kitco Roundtable with correspondent Paul Harris.
New Gold reported that consolidated gold production is expected to increase by approximately 35% from 2023 to 410,000 to 460,000 ounces in 2026 driven by increasing production profiles at both Rainy River and New Afton as growth projects are completed in the near-term. The company still sold off in a down market for gold miners, off 6% for the week to $1.58 a share.
New Gold is a Canadian-focused intermediate mining Company with a portfolio of two core producing assets in Canada, the Rainy River gold mine and the New Afton copper-gold mine.
The other precious metal, silver, shows promise. According to Christopher Vecchio, Head of Futures & Forex at Tastylive.com, the metal is near a year low. It also does well during periods of volatility. The U.S. is heading into an election year. The congress is also setting up for a budget fight.
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Metals traded lower end of week when jobs data came in stronger than expected, noted mining audiences manager Michael McCrae.
On Saturday McCrae recorded Kitco Roundtable with Kitco correspondent Paul Harris.
On Friday jobs data showed the U.S. economy created a whopping 353,000 jobs last month, significantly beating expectations. Markets see only a 20% chance of a rate cut in March, and they have pared back expectations for a rate cut in May.
Copper spiked mid-week, nearing $4 pound to settle back where it started, due to the strong job's number. Gold finished the week near the 2050 level, mostly flat for the week.
In mining news British Columbia's Nisga'a Nation is establishing Canada's largest majority Indigenous-owned public company. The new royalty company includes mining heavy hitter Frank Giustra, who will be strategic advisor to the newly-formed Nations Royalty.
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The copper market is setting up nicely and prices for the metal should head higher, noted Kitco correspondent Paul Harris.
On Monday Harris, mining audiences manager Michael McCrae and Soar Financial CEO Kai Hoffmann recorded Kitco Roundtable at the Vancouver Resource Investment Conference.
Harris noted that copper supply is starting to dwindle, while energy transition is increasing demand.
The three panelists also noted the downbeat mood at the first major mining show of 2024, as resource companies hope to turn the page on a mostly forgettable 2023.
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A Chinese miner made a large investment into a Latin American copper developer, noted Kitco correspondent Paul Harris.
On Saturday Harris and mining audiences manager Michael McCrae recorded Kitco Roundtable.
Earlier this week Solaris Resources announced a $130 million strategic investment by Zijin Mining Group. Solaris is advancing its Warintza project, a high-grade open pit copper resource in Ecuador.
McCrae noted that both gold and copper were under pressure due to a hawkish turn by the Federal Reserve.
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Uranium leaped to a new high, noted mining audiences manager Michael McCrae.
On Saturday McCrae and Kitco correspondent Paul Harris recorded Kitco Roundtable.
Uranium traded as high as $100 this week according to pricing data provider UxC. The metal is has tripled in the past two years. Uranium was propelled higher when mining giant Kazatomprom announced a production shortfall of the metal due to lack of sulphuric acid needed for production.
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Gold has had a solid year, overcoming the Fed's higher interest rate regime, noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable.
Spot gold managed to finish the final trading day of 2023 in the 2060 range, up about $200 from the start of the year.
In mining news top ten gold miner, Agnico Eagle (NYSE: AEM), announced today it was investing $23.12 million in Canada Nickel Company (TSXV: CNC). Agnico will own about 12% of the Ontario-focused, early-stage nickel company.
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On Friday gold prices fell on strong job numbers from the U.S., noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable.
Friday was jobs day. The U.S. economy created 199,000 jobs last month, beating expectations. At the same time, the unemployment rate dropped to 3.7%, down from 3.9% in October.
The strong economy implied that the Fed is further away from easing. On the news gold prices hit a two-week low and silver a three-week.
According to some analysts, Monday's rally and subsequent selloff was not helpful for gold's long-term price action.
In mining news depressed platinum prices have forced miners to lay off workers.
Anglo American is preparing to freeze spending on growth and widen job cuts in South Africa. Reuters reports that the miner is preparing to mothball some high-cost platinum mines.
Last week Sibanye-Stillwater, the other major platinum producer, said it was cutting about 100 employees and 187 contract workers at its Stillwater West mine in Montana
Platinum prices have declined 11% for the year.
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Gold finally hit a record high, and the copper markets had a big supply shock, said mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable.
February gold futures last traded at $2,091.90 an ounce, up more than 4% from last Friday's close. Gold's previous record was at $2,089.20 in August 2020, wrote Kitco editor Neils Christensen.
Gold is seeing renewed buying momentum as markets continue to price in a potential rate cut as early as March. The precious metal's rally comes even as the central bank maintains its tightening stance. Friday, Federal Reserve chair Jerome Powell said that he is still not confident monetary policy is sufficiently restrictive enough to bring down inflation to 2%.
In mining news, First Quantum was the story. Panama's top court declared that First Quantum's contract with the government to operate a key copper mine was unconstitutional. Panama's president, Laurentino Cortizo, then closed the mine.
First Quantum is a top 10 copper miner.
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To end the week gold has spent much of the time trading above $2,000 a ounce, noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable.
After the good CPI numbers earlier this month that may allow the Fed to stop hiking, gold has found room to rise.
Notable economic number this week were the the S&P Global Flash U.S. manufacturing and services PMI.
Manufacturing contracted while services expanded. Bottomline is that the numbers put the U.S. economy at neutral.
Copper was up again this week, nearing the $3.80 lb point. Supply disruptions favored the metal, which segues to mining news.
In mining news, First Quantum is facing supply disruptions and a looming court decision.
Protestors in Panama are blocking supplies from reaching the mine. Without relief, the company warned that production could be halted.
The mine also faces legal challenges. It's recently signed mining contract it signed with the government is being challenged in the supreme court. A decision is expected in the coming days or weeks. A majority of lawyers surveyed by Reuters said
the Supreme Court is likely to rule against the company, citing a precedent. -
Commodities and markets were up this week off the good consumer price index report, which came in below market expectations, noted mining audiences manager Michael McCrae.
On Saturday McCrae recorded Kitco Roundtable.
The GDX, a index of gold miners, was up 5% on the week. The S&P was up half that amount. Gold added about $40 for the week to end at the 1980s range.
Mid-week consumer price index report was below Wall Street estimates, which sparked a major rally on Wall Street. The core CPI rose 0.2% and 4%, against the forecast of 0.3% and 4.1%. The annual rate was the smallest increase since September 2021, according to CNBC.
Copper was up 4% this week. Even better for miners is that oil prices were mostly flat on the week with WTI trading in the mid 70s.
The big mining news from the start of the week is when Glencore bought 77% of Teck Coal Business for $6.93 Billion. Nippon Steel took the remaining portion.
In a news release Jonathan Price, President and CEO, Teck. said the sale will ensure Teck is well-capitalized and able to
realize value from its base metals business and re-focus Teck as a Canadian-based critical minerals champion - Se mer
