The Weekly Dig - November 4, 2016

Mick Carew, PhD, mcarew@haywood.com and The Haywood Mining Team

Election Uncertainty Boosts Gold While December Rate Hike Still Expected

Highlights:

It was a positive week for precious and base metals over all, with gold in particular rising above the $1,300 per ounce level as increased uncertainty over next week’s election result jittered equity markets. Last week, it looked increasingly likely that Hillary Clinton would prevail as voters, and even members of the Republican Party, veered further away from Donald Trump’s controversial rhetoric. However, with the announcement that the FBI would reopen Clinton’s email file, her decisive lead in the polls quickly evaporated. With markets nervous at the prospect of Trump occupying the White House equity markets fell, with the Dow Jones Industrial Average and the S&P/TSX Composite index down 1.5% and 2% respectively. Meanwhile, precious metals bounced; gold rose 2.2% before finishing at $1,304 per ounce, while silver (3.5%), platinum (2%) and palladium (1%) also rose during the week, finishing at $18.40, $997 and $624 per ounce respectively. Meanwhile, base metals were also up this week as activity in China’s industrial sector rose to its highest level in two years In particular, the price of copper continues to surprise investors, up 3% this week to finish at $2.26 per pound. Lead and zinc also enjoyed a lift, up 1.6% and 1.8% respectively, while nickel finished marginally higher at $4.73 per pound. The news wasn’t so good for oil; after WTI crude pierced the $50 per barrel level on the back of news that OPEC could restrict supply, oil prices have pulled back hard, with WTI crude finishing 11% lower at $44 per barrel. Finally, uranium prices continue to struggle as reactors in Japan remain offline and excess supply endures; the Broker Average Price for uranium (BAP) for uranium fell 1% to finish at 18.75 per pound.

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