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In This List

Gold closes in on US$1,300/oz amid renewed China, global growth concerns

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Gold closes in on US$1,300/oz amid renewed China, global growth concerns

Gold continued to close in on the US$1,300 per ounce mark in the week ending March 8 after China revealed a pessimistic GDP growth outlook of 6% to 6.5% for the full year, weighing further on sentiment already dogged by the Asian country's trade war with the U.S.

Laying out China's plans while opening the annual session of its legislature, Premier Li Keqiang announced the numbers March 4. China's GDP rose 6.6% from a year earlier in 2018, its slowest rate in nearly three decades.

In his address, Li acknowledged the "uncertainties of the China-U.S. trade friction" that has impacted growth and ongoing negotiations towards a resolution.

However, a new study by researchers at the Chinese University of Hong Kong and the University of Chicago found China over-reported its economic growth between 2008 and 2016 by an average of 1.7 percentage points, Bloomberg reported March 8.

The Financial Times also reported March 8 that a summit between U.S. President Donald Trump and President Xi Jinping has been pushed back from the end of March, with both countries to sort out differences and avoid an "embarrassing failure."

In further negative signals, the European Central Bank downgraded economic growth projections for this year to 1.1%, a drop of 0.6% from forecasts three months ago, though it judged the risk of a recession in the eurozone as "being very low."

The Organization for Economic Co-operation and Development has also cut its world economic growth forecast this year from 3.5% to 3.3%, with a particularly sharp downturn for Europe. The U.K.'s was cut from 1.4% to 0.8% and Germany’s from 1.6% to 0.7%.

Price Ring

Global growth concerns helped propel gold up 0.4% to US$1,299 per ounce, while silver rose 1% to finish the week at US$15.30/oz.

Those same forces saw most base metals fall except for nickel, which stayed mostly flat with a 0.3% rise to close the week on US$13,156 per tonne.

Aluminum, which fell 2.6% to finish the week on US$1,841/t, was joined by copper (-1%, US$6,460/t), zinc (-2.9%, US$2,739/t) and lead (-2.6%, US$2,096/t) among the falling base metals.

The China spot iron ore import price was up 0.3% to US$83.20/t, while LME tin fell 1.2% to US$21,405/t.

Talking Points

Haywood Securities said in a March 8 note that many attendees at the March 3-6 Prospectors & Developers Association of Canada convention still expect gold to hit US$1,400 at some point this year.

Yet Haywood's weekly Technical Analysis issued March 4 also noted that having been range-bound since 2013, gold still has significant resistance to deal with before a "secular bull market" can start; while copper has broken out of a six-month base, witnessing improving monthly momentum.

Financings

Anglo American PLC priced €500 million in 1.625% guaranteed notes due March 11, 2026, and £300 million in 3.375% guaranteed notes due March 11, 2029. The guaranteed notes are part of a US$15 billion euro medium-term note program, with the notes to be issued March 11 this year.

Incitec Pivot Ltd. also priced A$450 million in 4.30% notes, due March 18, 2026, to refinance its existing A$200 million notes and an upcoming bond maturity.

ArcelorMittal priced a US$750 million bond issue offering of its 4.55% notes due 2026 and aims to use net proceeds to repay existing debt related to its proposed takeover of Essar Steel India Ltd.

Cia. Siderúrgica Nacional appointed Citibank to look for buyers for US$1 billion in future iron ore output as part of its deleveraging plan.

Xiamen Tungsten Co. Ltd. launched a short-term bond offering of 600 million Chinese yuan.

Gran Colombia Gold Corp. outlined plans to raise C$20 million through a bought-deal private placement of convertible unsecured subordinated debentures, three days after filing a short-form prospectus targeting C$25 million.