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Precious metals continue to recover following a weaker US dollar

11:27, 23 May 2022

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In this article:
  • Palladium

    1972.83 USD
    25.84 +1.340%
  • Platinum

    897.82 USD
    -3.17 -0.360%
  • Silver

    19.889 USD
    -0.403 -1.990%
  • Gold

    1811.12 USD
    3.25 +0.180%

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Bank reserve bars of precious metals arranged in rows
Precious metals continued to recover following a mass metal sell-off seen last week – Photo: Shutterstock

Precious metals continued to steadily inch up on Monday morning, starting the week on an optimistic note and rebounding from the mass sell-off seen last week. Gold, silver, platinum and palladium were all up, as the US dollar (DXY), which has been rallying for the last few weeks finally saw a slowdown.

According to Piero Cingari, analyst at Capital.com, “After four weeks of declines, gold and silver have reversed course and gained momentum. Investor positioning on precious metals now is lighter than it was the beginning of the year.Speculators have considerably cut their net long holdings in gold and silver over the past weeks, according to the latest Commitment of Traders (COT) data, but this might also be an indication that selling pressure has eased.

Rising risks of a recession in the advanced world, owing to a sharp drop in real household incomes due to sticky high inflation, is now undermining the dollar’s strength and giving breathing room to assets such as gold and silver, which have been hit hardest in the past weeks by rising market expectations for Federal Reserve rate hikes.

In London morning trading, Spot gold inched higher 0.9% to $1861.3 per troy ounce, boosted further by a weakening US dollar (DXY), as well as by a somewhat unexpected rally in equities recently.

Gold bounces back from recent sell-off 

Silver rose 1.8% to $22.2 per troy ounce, tracking gold’s footsteps, as the precious metal lingered around almost 2-week highs, following renewed safe haven demand, as geopolitical tensions from the ongoing Russia-Ukraine war continued to plague commodity markets.

US Treasury yields jumped 4.5 basis points to 2.8%, rising stealthily, but still falling short of the over 3% mark seen a few weeks back.

Platinum increased 1.9% to $975.2 per troy ounce, touching close to a one-week high, following recovering demand from the auto manufacturing sector, where the precious metal is used widely in auto catalysts. Falling stock piles of supplies also contributed to the rally, as the metal is likely to reduce its surplus this year.

Palladium has risen 3.96% to $2016.4 per troy ounce, bouncing back from the recent 4-month low seen due to the mass metal sell-off earlier this month, as a recent report from Johnson Matthey (JMAT) highlighted that the precious metal could soon stand to see a deficit this year, due to dwindling South African supplies and Russian sanctions.

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Copper rose 0.6% to $4.3 per pound, climbing steadily away from the 8-month low seen a few days back, as China recently announced that it would start loosening some of its coronavirus measures, in an attempt to reopen the economy. With China accounting for more than half of the base metal’s global demand, this went a long way in supporting prices further.

Aluminum advanced 4.5% to $2977.8 per tonne, buoyed further by China’s earnest attempts at getting its rising coronavirus epidemic under control. However, prices were capped by investor anxiety about tightening monetary policy globally affecting base metal demand.

 

5 things to know about metals today

  • Gold: Gold is finally on the upside, with the metal hovering around a two-week high.
  • Platinum: Sibanye Stillwater (SBYSF) has recently announced that labour unions have been using ongoing gold mine strikes as leverage to strike better platinum deals as well.
  • Palladium: A number of metal traders have begun “self-sanctioning” Russian metals, following the UK’s footsteps, which have significantly disrupted markets.
  • Copper: Botswana’s Khoemacau copper mine recently saw disruptions following an accident killing two workers.
  • Aluminium: The Trade Remedies Authority has recently suggested measures through which to protect the UK aluminium extrusions industry.

Mining stock performance

  • Glencore was recently revealed to have a possible upside of about 30.5% by Barclays (BARC)
  • Rio Tinto has recently announced that it has signed a one-year trial contract with BP (BP) regarding marine biofuels.
  • Antofagasta recently highlighted a 11.7% possible upside indicated by Barclays.
  • BHP has recently been encouraged by billionnaire Andrew Forrest to embrace green action.
  • Anglo American has recently announced a growth in its earnings per share (EPS)
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