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April 18, 2024
PI Global Investments
Precious Metals

Weekly commodities wrap: Precious metals flounder due to hawkish Fed

Precious metals were pressured this week following Fed Chair Jerome Powell’s comments hinting at tighter monetary policy.


Commodities were fairly subdued this week, as underwhelming economic data from China continued to dampen consumer sentiment. More concerns about slowing economic growth and earnings misses also arose, especially with companies warning of weakening profits and less optimistic outlooks.

Brent crude oil dropped 4.90% this week, coming in at $81.03 (€75.86) per barrel on Friday. WTI plunged 4.84%, clocking in at $76.61 per barrel. Natural gas also fell 13,77% this week to $3.03/MMBtu.

Precious metals such as gold, silver and platinum have all had a very rocky week.

Gold dipped 2.25% to $1,945 per troy ounce, dragged down by Jerome Powell, the US Federal Reserve’s chairman, signalling that interest rates may have to be further tightened in order to bring inflation back to the 2% target.

The UK has also imposed new sanctions on gold traders such as Dubai-based trader Paloma Precious DMCC. This is in an effort to further constrict the network of gold and oil traders helping bolster Russia’s war chest in its conflict with Ukraine.

Silver, following in gold’s footsteps, also dropped 2.78% weekly, to $22.4 on Friday afternoon. The precious metal also saw lower demand as worries about a wider Middle Eastern conflict stemming from the Israel-Hamas war decreased somewhat. This has led to a spur of investors now cashing in on their earlier safe-haven buying of gold and silver, leading to increased selloffs.

Palladium has nosedived 14.06% this week, hovering near 5-year lows at $962.1 per troy ounce, as automobile demand from China continues to flag. Palladium is mostly used in catalytic converters in traditional vehicles, so is being buffeted by the shift to electric vehicles (EVs).

Platinum also slid 8.12% to $850.0 per troy ounce, hurt by top jewellery consumer China lagging on sales. Platinum is another key component in automobile catalysts, with palladium often being exchanged for the former.

Copper has inched down 1.57% this week, to $3.6 per pound. Mine investments in Peru, one of the world’s largest copper producers, has trailed off as new projects are harder to come by at the moment.

Steel also fell almost 2% to CNY 3901 ($535/€500) per tonne, as the EU steel and aluminium import tariff conflict with the US drags on.

Aluminium also fell 1.31% to $2,224 per tonne, pressurised by mixed earnings results from aluminium producers.

Mining companies slump

Coming to major mining companies, Chilean miner Antofagasta saw a weekly decline of 6%, trading at £12.87 (€14.72) on Friday. The company has also recently released its second Climate Change Report, which highlights the ongoing steps Antofagasta has taken to minimise the impact of its operations in ecologically-sensitive environments.

British-Australian miner Rio-Tinto fell 2.80% to $64.5 this week. The company has just appointed Mathew Breen as the new COO for its Diavik diamond mine in Canada.

Glencore climbed down 4.6% to £4.25, following the company announcing that it would be ceasing production at its Mt. Isa copper mines in Queensland, Australia.

Barrick Gold also plunged 5.56% this week to $15.1, with investor confidence being somewhat shaken as the company announced an investment of $23.4 million in Hercules Silver.

The VanEck Gold Miners’ exchange-traded fund (ETF) was down 6.6% for the week, to $27.6 while the S&P Metals and Mining ETF saw a decline of 4.7%, to $49.

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