It has been a busy week for the stock market, with indexes in the US and Canada dipping dramatically on Wednesday (January 27). The volatility benefited the
precious metals
, as
gold
began to claw back gains made earlier in the month.
Despite the momentum the yellow metal was on course to end the month 4.4 percent off its year-to-date high.
Silver
prices neared US$28 an ounce in pre-trading hours, the white metal has become the focus of a large swath of retail investors, who targeted GameStop (NYSE:
GME
) earlier this week.
The market swing weighed on the
base metal
sector’s ability to retain earlier highs, as broad declines sent the metals lower mid-week.
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Gold opened the week trading at US$1,864 per ounce before falling to US$1,836 Wednesday. The decline was a result of US dollar strengthening, this was countered by dip in the
S&P/TSX Composite Index
(INDEXTSI:
OSPTX
), which fell to 17,424.43 its lowest point year-to-date.
The drop was echoed by the Dow Jones Industrial Average (INDEXDJX:
.DJI
), which shed its January gains slipping to 30,303.17. The S&P 500 (INDEXSP:
.INX
) also declined mid-week when it fell from 3,849.62 to 3,750.77.
By Thursday (January 28), the gold price had trended higher but remained range bound below US1,860, a trend Will Rhind of GraniteShares expects to continue.
Watch Rhind discuss the current gold market and the factors weighing on its growth.
“Gold rallied up to US$1,950 roughly on the back of the election results, and the promise or the hope of more stimulus, but it hasn’t actually happened as of yet,”
he told INN.
“That’s not to say that it won’t happen … but obviously as of right now, it hasn’t actually happened, so gold’s pulled back a little bit from then.”
Gold was trading for US$1,872.90 at 9:27 a.m. EST.
The silver price surged higher after hours Thursday, rising from US$25 an ounce at 3:00 p.m. EST to US$27.59 before the morning bell.
The price action is being attributed to the same public trading groups that sent GameStop stock soaring. These retail investors are believed to have now set their sights on silver. The day traders are now working to initiate a short squeeze.
Gareth Soloway explained the recent flurry of activity attributed to the WallStreetBets Reddit forum highlights the power of social media. Both
#BuySilver
and
#BuyGold
were being used across Twitter (NYSE:
TWTR
) Friday morning.
Listen to Soloway of InTheMoneyStocks.com explain how the GameStop stock bump could impact the silver market.
“There’s some big short positions in silver out there, and I think they’re trying to ignite that same short squeeze … (but) there’s a big difference between the market cap of silver, which is massive, compared to a stock like GameStop, which when it started was only a billion dollar company,”
said Soloway
.
The white metal was selling for US$27.17 at 9:42 a.m. EST.
Platinum
displayed volatility for the final week of January. Thursday saw the autocatalyst metal fall to US$1,043 per ounce, territory the metal had been in since early January. Positivity in the gold and silver market helped push platinum out of the lows early Friday.
After briefly touching its Monday (January 25) value (US$1,100) in pre-trading hours, the value of platinum fell back to US$1,082 at 9:48 a.m. EST.
Palladium
prices have been locked in a downward trend since early January when the metal reached its year-to-date high of US$2,364 per ounce. In the weeks since palladium has shed some 5.7 percent.
At 9:51 a.m. EST palladium was priced at US$2,221 an ounce.
As the US dollar showed resilience this week nearing its previous year-to-date high, the base metals sector felt pressure, leading to broad declines across the space.
“With the exception of tin that remains in high ground, the rest of the base metals seem to be rolling over to the downside and if the dollar does strengthen further that might weigh on prices more,” read a
Friday note from Metal Bulletin
.
Copper
continued to battle headwinds this session, eroding gains made earlier in the month. By Thursday, prices had fallen from US$7,984.50 per tonne to start the week to US$7,778.50, a 2.5 percent drop.
“We have been expecting a countertrend move, one seems to be getting underway now and we should get a feel for how strong underlying bullish sentiment is by seeing how far any pullback goes and how long it lasts,” explained the Metal Bulletin report. “Overall, we remain long-term bullish toward the base metals on account of expecting more infrastructure spending, but a correction could be quite a constructive development after such long rallies.”
Copper prices improved slightly Friday to sell for US$7,814.
Nickel
was also on track for a 3.6 percent price drop this week. The dip follows a two weeks of gains which brough the metal to a year-to-date high of US$18,370 per tonne on January 11.
By Friday nickel was moving for US$17,580.
Zinc
also registered a dramatic drop, slipping below US$2,550 per tonne for the first time since November 2020.
The metal ended the week trading for US$2,546.
Lead
rounded out the base metal loses falling 1.5 percent from Monday by week’s end. The price of lead was US$2009.50 per tonne on Friday.
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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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