Metals Weekly Round-Up: Silver Goes Viral, Reaches 7 Year High


silver, gold and copper metal

The white metal was benefiting from the WallStreetBets story and retail investor sentiment, although it has dropped off since.

Both gold and silver were on track to end the week at a loss, with silver shedding 13.9 percent from its Monday (February 1) high, US$30.03 per ounce.

The white metal was benefiting from the WallStreetBets story and retail investor sentiment which appeared to weaken after the first morning bell for the month. By Tuesday (February 2), silver was back in the US$26 range.

The yellow metal also faced headwinds from a positively performing US dollar and rising Treasury yields. The pressure forced gold below US$1,800 per ounce for the first time since late November.

February has been volatile for gold, pushed lower as the US greenback entered territory unseen since late November 2020. Prices dipped as low as US$1,784, weighed down by a dampening in safe haven demand.

“There is some technical rebound as investors think Thursday’s drop was overdone, but overall trend in gold remains bearish on rising dollar and yields,” Margaret Yang, a DailyFX strategist told Reuters.

The recent price drop could be indicative of some long term challenges in key markets. According to a recent report from the World Gold Council, demand in China fell 27 percent in 2020. A return in retail demand is likely, however there may be declines in other areas.

“While a relatively positive outlook for China’s economy in 2021 could extend the recovery in local gold consumption, challenges arise from the possible lower investment demand for gold and the lightweight trend in the gold jewellery sector,” reads the overview.

Gold was priced at US$1,808.73 as of 11:25 a.m. EST.

Silver started the month registering a seven year high, as news around the Reddit investor short squeeze reached fever pitch. The investor forum has since moved away from silver to refocus on GameStop (NYSE:GME), however some of the interest lives on.

As Chris Marcus, founder of Arcadia Economics, told INN, 115 million ounces was added to the iShares Silver Trust (ARCA:SLV), over a three-day period (January 29 – February 2).

Watch Marcus discuss the viral manipulation of the silver market and where it may go.

“I really want to be careful of how I’m phrasing things today, because I don’t want to scare people. Having traded equity options throughout 2007 and 2008, and (having studied) gold and silver ever since then, there have been a lot of times where it felt like things were building — but there are a lot of signs emerging that something is happening now,” he said.

At 11:26 a.m. EST silver was trading for US$26.42 an ounce.

Platinum rallied to a four year high of US$1,125 per ounce to start the month. The spike came just days after Anglo American Platinum (Amplats) (LSE:AAL,OTC Pink:AGPPF) announced a 49 percent Q4 output decrease.

COVID-19 paired with the closure of the company’s convertor plant contributed to the decline. After hours Thursday (February 4), the automotive metal fell to US$1,073.

Platinum was selling for US$1,118 at 11:26 a.m. EST.

The AMPLATS production slip also benefited palladium which trended higher for the majority of the five day period. By Friday, prices had climbed 3.7 percent from Monday’s US$2,189 per ounce.

At 11:27 a.m. EST, palladium was valued at US$2,264.50.

The beginning of a new month proved challenging for the base metals as broad declines weighed on the sector.

“The base metals are still for the most part in sideways-to-lower consolidation trading ranges, but what weakness has been seen in recent weeks has not picked up downward momentum, suggesting there is little appetite to reduce exposure on a large scale,” reads a Friday note from Fastmarkets.

Copper prices started the session at US$7,827 a tonne, and subsequently fell lower. By Tuesday (February 2), the value of the red metal had slid below US$7,800.

The decline was brief, and prices climbed back above the threshold a day later. For the remainder of the quarter, Fast Markets analysts remain positive about the red metal.

“In 2021, COVID-19 and demand from China will continue to have a far greater influence on copper prices than the green agenda,” the report reads. “We see a big supply deficit this year while demand and economic activity bounce back from the COVID-19 shock, fueled by policy support from governments and central banks.

Copper was moving for US$7,864 Friday.

Following a strong start in January, zinc prices have faced challenges over the last five weeks shedding 10 percent. Falling to US$2,539 per tonne prices moved north of US$2,550 on Wednesday (February 3).

By Friday zinc was priced at US$2,600.

Nickel also battled headwinds for the first week of February, which removed 1.5 percent from its value by Thursday.

With prices trending lower, nickel’s use as a key metal in the electric vehicle sector was highlighted in a Roskill report commissioned by the European Commission Joint Research Centre. The joint effort forecasts a bright future for the metal.

“Automotive electrification is expected to represent the single-largest growth sector for nickel demand over the next twenty years,” it reads. “The availability of suitable feedstock rather than processing capacity is the biggest “bottleneck” in the nickel sulphate supply chain and is the cause of the market potentially going into a structural deficit post-2027.”

A late week rally propelled the metal higher, and by Friday nickel was trading for US$17,915.

After falling from US$2,024 per tonne Monday, lead fell to US$2,008 Tuesday and spent the rest of the week moving sideways.

Friday saw lead prices holding at US$2,010.

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

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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