Gold and other precious metals gaining some upward momentum as investors wait for inflation data to be released.
Gold inched up as US Treasury yields fell ahead of key US inflation data – Photo: Shutterstock
Precious metals continued their advance on Wednesday morning, providing a much-needed midweek boost, with gold, silver and platinum all extending their rally.
Investors await crucial inflation data today, with the US CPI figures for April due to be published later in the day. With inflation already at multi-decade highs in a number of regions, investors leant closer to safe-haven assets such as gold.
According to Piero Cingari, an analyst for Capital.com: “Falling US yields provide oxygen for gold and other commodities. Investors are rushing to Treasuries amid global risk aversion, concerns about economic slowdowns, and a probable peak in inflation.
“For gold to rally, expectations of Federal Reserve rate hikes must be reduced, which can only happen if inflation begins to decline. Today’s release of April’s CPI figures will be crucial to monitor.”
In London morning trading, Spot gold climbed up 0.20% to $1,842.20 per troy ounce, further escalating from its previous three-week slide. However, the precious metal was still struggling valiantly against a stronger US dollar (DXY), which has recently seen 22-year highs.
With the US Federal Reserve reassuring investors that it would do anything necessary to bring inflation under control, even at the cost of short-term economic decline, investors still turned to gold as a comfort.
Gold inches up as US Treasury yields fall
Silver inched up 1.87% to $21.60 per troy ounce, but still fell short of hitting the $22 per troy ounce mark, leaving investors to despair of the precious metal recrossing the psychological $25 per troy ounce barrier anytime soon. Bets of a 90% chance of a 75% interest rate hike by the US Federal Reserve in June are also increasingly likely.
US 10-year Treasury yields fell 5.5 basis points to 2.9%, receding from the psychologically important level of 3% that was crossed very recently.
Platinum rose 1.19% to $976.70 per troy ounce, bouncing back from the one-week low of about $955 per troy ounce seen a couple of trading sessions back, as the precious metal saw renewed demand from the petrochemicals and hydrogen sectors. Re-escalating supply concerns from Russia also continued to support prices.
What is your sentiment on Palladium?
Palladium increased 1% to $2,060.10 per troy ounce, but continued to trade at lower levels than the highs of over $2,300 per troy ounce seen earlier in the month. The UK recently announced tariffs of about 35% on the import of Russian platinum and palladium, which has lead to renewed supply anxieties for investors.
Copper increased 1.52% to $4.20 per pound, as investors seemed to slowly shrug off demand concerns from top consumer China, even as recent data showed that the country’s copper imports for April fell about 4% year-to-date. However, a number of miners are looking at this copper slump as transitory, with the long-term expectations much more upbeat due to rising demand from electrical vehicles.
Aluminum dropped 0.63% to $2,735.90 per tonne, as the industrial metal’s troubles are far from over, following a dip from Chinese factories and smelters, as well as weakening demand from Japan’s auto manufacturing sector.
Five things to know about metals today
- Gold: KeyCorp equity research analysts have recently upped their expectations for Agnico Eagle’s earnings per share estimates for 2022.
- Palladium: Southern Palladium has announced its interest in joining elite platinum group miners in South Africa recently.
- Iron ore: Sinosteel has recently signed a deal worth approximately $690m regarding an iron ore mine in Cameroon.
- Aluminium: Aluminium prices recently hit a five-month low following demand headwinds.
- Copper: Barrick Gold (ABX) recently announced a renewed interest in exploring copper assets in Africa.
Mining stock performance
- Glencore (GLEN) has recently faced shareholders’ wrath due to its unclear net-zero climate plan.
- Rio Tinto (RIOgb) recently warned that Australia needs to up its game when it comes to its renewable energy roll-out.
- BHP (BHP) recently had its “hold” rating reconfirmed by Berenberg Bank.
- Anglo American (AALI)’s “buy” rating was also recently reconfirmed by Berenberg Bank.
- Antofagasta (ANTO) recently reported a dip in its gold, copper and molybdenum production.
