Precious metals gained during the week ended May 20 after suffering setbacks in the past two months, Saxo Bank's head of commodity strategy said in a May 20 note.
"Gold ... found a fresh bid amid continued turbulence across global stock markets," Ole Hansen said. "During the past month, gold suffered from the double blow of a stronger dollar and the [Federal Open Market Committee] signaling an aggressive pace of future rate hikes to combat inflation at the highest level in decades."
Saxo Bank maintains a bullish outlook for gold, citing a "need to diversify amid a troubled stock market" as well as a "potential increased risk of [an] FOMC policy mistake driving yields and the dollar lower," Hansen said.
Meanwhile, base metals have come under pressure as central banks look to impose tighter monetary policies to tame inflation, ANZ Research analysts said in a May 19 note.
Labor shortages and high energy costs are expected to affect growth in copper, aluminum and nickel supply, adding to the disruption that the Russia-Ukraine conflict will eventually have on Russian metals supplies.
Although the base metals market is facing concerns, ANZ Research has maintained a positive outlook. Consumer spending in the U.S. has remained robust, while demand in China is anticipated to return once the country's COVID-19-related restrictions ease.
Price ring
Precious metals rallied during the week ended May 20, with gold rising 1.6% to $1,843.73 per ounce and silver growing 5.7% to $22.03/oz. Palladium grew 3.7% to $2,004.00/oz, as did platinum, which climbed 1.8% to $960/oz.
Base metals also followed suit. Aluminum rose 6.3% to $2,935.00 per tonne, zinc went up 6.7% to $3,726.00/t and lead climbed 7% to $2,186.50/t. Nickel increased 2.8% to $27,941.00/t, and copper grew 2.9% to $9,451.00/t. Iron ore prices inched up 1% to $133.66/t.
Talking points
Carbon emissions in the steel industry are expected to drop 30% by 2050, compared with 2021 levels. Although the steel sector might be challenging to decarbonize, companies under pressure from stakeholders are shifting away from conventional blast furnaces toward low-emission technologies, according to a May 17 Wood Mackenzie report.
"Together with green hydrogen-based direct reduced iron, scrap use and adoption of carbon capture, utilization and storage, steel industry's carbon emissions can decline 30% from current levels by midcentury," Wood Mackenzie research director Malan Wu said.
Companies in the iron ore sector are also ramping up efforts to cut emissions through the use of "green corridors" in iron ore shipping routes. BHP Group Ltd., along with Rio Tinto Group, Oldendorff Carriers GmbH & Co. KG. and Star Bulk Carriers Corp., has chalked up plans to support a low-emission iron ore shipping route linking Australia and eastern Asia.
"Green corridors offer the opportunity to accelerate progress in tackling the challenges of decarbonizing shipping and can put conditions in place to mobilize demand for green shipping on specific routes," BHP spokesperson Satish Rajmohan told S&P Global Commodity Insights in an email.
Financings
In larger financings during the week ended May 20, Korea Zinc Co. Ltd. plans to invest $6.6 billion over the next eight years for the development of solar and wind power generation and green hydrogen production.
Rio Tinto Group unit Rio Tinto International Holdings Ltd. agreed to amend its funding plan with majority-owned Turquoise Hill Resources Ltd. to provide up to $400 million in short-term early advances to fund the development of the Oyu Tolgoi copper-gold project in Mongolia.
The financial creditors of Samarco Mineração SA, the bankrupt joint venture owned by Vale SA and BHP, also proposed to take over the company under an alternate restructuring plan.
