SWOT Analysis: Opportunities Across the Gold Mining Space

Jon Economy, Energy, Fiscal Policies, Geopolitics, Gold, Market Commentary, Precious Metals

Strengths
Typical of FOMC meeting weeks, we tend to see the precious metals take a hit. The best performing precious metal for the week was palladium, off 0.43 percent on little market moving news. Ford announced that it will add more downtime to five North American automobile plants due to a decrease in demand as inventories rise on dealer lots. The gold price could soon recover, says Jason Schenker, president and founder of Prestige Economics, the reason being that the Federal Reserve might raise rates less rapidly because of low U. S. inflation. ‘The fact that the Fed members lowered their forecast for their own future Fed funds rate indicates that the Fed may again kind of undershoot what they’re predicting they’re going to do for rates,’ Schenker told Bloomberg. This could end up being neutral to bearish for the dollar, which would help support the gold price. Gold has begun to climb back toward $1,300 an ounce on safe-haven demand now that tensions between Washington and Pyongyang are steeply escalating. Following new U. S. sanctions against North Korea, the rogue Asian country’s leader Kim Jong-un threatened to detonate a hydrogen bomb in the middle of the Pacific Ocean. With the back-and-forth rhetoric intensifying, investors’ interest in safe havens, gold included, has been renewed. Weaknesses
The worst performing precious metal for the week was platinum, off 3.77 percent. Platinum prices has been out of favor for the last couple of years, recently prompting Impala Platinum, the world’s second largest producer, to propose some job cuts in South Africa that could lead to supply disruptions if labor is not on the same page. Earlier this week, gold dropped below $1,300 an ounce as risks receded of another hurricane striking the mainland U. S. and as major stock market averages continued to hit record highs on a near-daily basis. In addition, a diplomatic resolution to the nuclear standoff with North Korea appeared likely, with Secretary of State Rex Tillerson saying the U. S. is seeking a peaceful conclusion.

This post was published at GoldSeek on Monday, 25 September 2017.