Precious Metals Weekly Round-Up: Gold Heads for Worst Close in a Year

Both gold and silver tumbled on Friday (July 13), as concerns over a global trade war was put on the back burner and the US dollar ticked up, setting the yellow metal on course for its lowest settlement in about a year.

As of 9:19 a.m. EST, gold was trading at US$ 1,241.70 per ounce, down US$ 13.40 from the previous week. As for the white metal, it dipped 0.97 percent, trading at US$ 15.77 per ounce as of 9:26 a.m. EST.

The greenback strengthened as it pushed higher on rising-rate expectations and drew haven demand amid the trade clash between the US and China. Both of these factors left investors uninterested in the precious metals for another week.

“Gold was pummeled and pounded by a broadly stronger dollar this week with prices sinking towards US$ 1,240,” stated Lukman Otunuga, research analyst at FXTM.

“The bearish price action witnessed in recent weeks despite the growing risk aversion continues to suggest that gold is still losing its safe-haven allure. Bulls have simply failed to garner any support from global trade concerns and this continues to be reflected in prices,” he added.

Both platinum and palladium were down for the week, trading at US$ 826 per ounce and US$ 935 per ounce respectively as of 9:38 a.m. EST.

Precious metals top news stories

Our top precious metals stories this week featured a look at how exploration spending from Canada’s top miners rose 31 percent in 2017, Tharisa (LSE:THS,JSE:THA) and its record-setting recovery of platinum group metals (PGMs) at 85.6 percent in its third quarter and a price update for gold for the second quarter.

1. Exploration Spending from Canada’s Top Miners Rises 31 Percent

Canada’s top 40 mining companies have boosted exploration spending from C$ 473 million in 2016 to C$ 620 million in 2017, thanks to an uptick in the mining cycle.

The average increase of the top 40 has more than doubled and these miners are also making waves for their advances in digital innovation. By aligning strategic partnerships, these companies are able to keep pace with advancements in technology, which allows them to become leaders in the market.

“Last year was a remarkable year for Canadian miners with significant increases in exploration spending. Overall, the sector continues to prioritize digital transformation efforts, focusing on increasing efficiency, enhancing safety and mitigating cybersecurity risks,” said Liam Fitzgerald, national mining leader, PwC Canada.

2. Tharisa Reports Record Platinum Group Metals Recoveries

Tharisa (LSE:THS,JSE:THA) recovered platinum group metals (PGMs) at 85.6 percent in its third quarter, surpassing its target of recoveries at 80 percent, the company announced on Monday (July 9).   

Tharisa said it produced 39,500 ounces of PGMs during the period, an increase of 3.4 percent quarter-on-quarter, ahead of target for its recoveries and production and leaving the company with intentions to raise its PGMs output to 200,000 ounces by 2020.

“We look forward to delivering on our production guidance for the full financial year and on our growth plans outlined in Vision 2020 in conjunction with the highly prospective projects in Zimbabwe,” Tharisa CEO Phoevos Pouroulis said.  

3. Gold Price Update: Q2 2018 in Review

The price of gold fell more than 6 percent in the second quarter, dipping below the crucial US$ 1,300-per-ounce mark in mid-May, where it would stay for the remainder of Q2.

A strong US dollar, benchmark US Treasury yields topping a seven-year high and a second Fed hike rattled gold over the quarter. While gains were made on the back of geopolitical concerns at the beginning of the period, investors shied away from holding bullion as a safe-haven during market uncertainty throughout the second half of the quarter, causing the precious metal to be in the position of lower highs and even lower lows.  

Despite gold’s reaction to these factors, many industry insiders believe that this is simply a seasonally weak period for the yellow metal and that it will return to value within the next few months, with its safe-haven nature once again appealing and therefore allowing for prices to rise in the third quarter and beyond.

Also in the news

Also making news this week is Prestige Bullion, a joint venture between Rand Refinery and the South African Mint, will sell 1 ounce silver bullion Krugerrands beginning August 1, 2018.

The silver Krugerrand will be produced in unlimited mintage, dependent on market appeal and will also be linked to the daily price of silver.

The creation of the silver bullion Krugerrand will be the first time in its 51-year history that the Krugerrand has produced a metal other than the 22 carat gold in unlimited mintage.

Finally, Anaconda Mining (TSX:ANX), withdrew its previously announced premium take-over bid to acquire all the issued and outstanding shares of Maritime Resources (TSXV:MAE). Anaconda will not take up any of the Maritime shares tendered in connection with the bid.

“With the recently completed private placement, Maritime shareholders made it clear that they stood with management and wanted to pursue a stand-alone strategy to advance the Hammerdown Project. Anaconda continues to believe that its offer was compelling and provided shareholders immediate appreciation in their Maritime shares,” said Dustin Angelo, president & CEO of Anaconda Mining.

“In addition, over the long term, Anaconda could have created more value for Maritime shareholders through the combination of the two companies’ assets than what Maritime could have done on its own. Now that Maritime is behind us, we will focus on other opportunities we have in Atlantic Canada to grow our business,” he added.

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.

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