Column: Electric dreams turn into a nightmare for battery metals
A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
For the first time in weeks, a majority of participants in the Kitco News Gold Survey predicted higher gold prices and many believe that gold is building a base in the $1,570 range.
25 gold dealers, investment banks, futures traders, money managers and technical-chart analysts took this week’s survey on Friday and of those, 17 see prices going up.
A major reason for the expected rise is the latest US consumer price index data, which indicate inflationary pressures going forward.
Jeffrey Nichols, senior economic adviser to Rosland Capital, said momentum and technical indicators are firming, central bank buying and the whiff of inflation as seen in Friday’s consumer price index report could push gold over $1,600 an ounce. “Today’s reported acceleration in consumer price inflation, although to a significant extent caused by higher gasoline prices, will serve as a reminder to investors and traders alike that higher inflation is lurking down the road,” he said.
The few survey participants who see lower prices point to the strength of the US dollar, equities gains and other positive economic data such as the declining unemployment figures. All of this could lead the Federal Reserve to hint at stimulus reductions. Market analyst Ken Morrison believes:
“There will be some changes in the Fed’s statement and possible revisions to their unemployment and economic projections for the latter half of 2013 and 2014. They seem to be changing their outlook on a month-to-month basis for whatever reason. I believe they will not alter the current $85 billion in stimulus for now, but rather offer hints or clues that it could be reduced or done away with in the future,” he said, noting the last time Fed governors came out with a slightly better take on the U.S. economy, gold fell, until the metal found some support after the Fed announced the current stimulus plan.
Gold closed at $1,592.00/ounce on Friday with other metals also moving higher. Platinum for April delivery rose 0.2 percent to $1,592.40/ounce and palladium for June delivery rose 0.6 percent to $775.65/ounce.
Sources: Debbie Carlson of Kitco News with survey contributions from Allen Sykora
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