Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
On Friday, the price of gold was bolstered by a weaker US dollar and turmoil on financial markets lifting the metal to its highest level since the election of Donald Trump as US president in November.
Gold futures in New York for delivery in December, the most active contract, touched a high of $1,306.90, in massive volumes of nearly 26m ounces by noon, before paring some of those gains.
The gold price received a boost last week on escalating tensions between US and North Korea, but the safe-haven buying related to the stand-off with the dictatorship soon faded.
While North Korean worries come and go it increasingly looks like Donald Trump will be a consistent source of support given the unpredictability of his presidency
On Friday the attention of gold bulls turned to US domestic matters including minutes from the Federal Reserve, showing little urgency about the pace of interest rate hikes in the US.
Those comments coupled with the lack of progress on fiscal stimulus policy in Washington put pressure on the dollar and yields on US government bonds which usually moves in the opposite direction of gold.
Ole Hansen, chief of commodity strategy at Saxo said on Friday due to “increased risk of US policy paralysis the market is showing accelerated signs of nervousness”:
While North Korean worries come and go it increasingly looks like Donald Trump will be a consistent source of support given the unpredictability of his presidency. This as political frictions between the White House and Congress continues to rumble and President Trump’s administration looks increasingly dysfunctional and isolated.
In late 2016, optimism about the economic impact of a Trump presidency and Republican control of both houses saw the greenback climb to 14-year highs, but sentiment has soured since then.
The US dollar index, measured against a basket of currencies of the country’s major trading partners, fell to below 94 on Friday and the currency is now worth 8.5% less than this time last year.
The US dollar’s all-time peak of 164.7 was reached in February 1985. That coincided with a bottom in the price of gold of $284.25 an ounce.
