This is the first in our four-part series looking at the state of metals. Using June 2016 as a snapshot, we’ll take a look at the performance of key Australian mining industry metals, gold, silver, platinum and palladium, starting with gold.
It wasn’t the anticipation of record gold medal hauls at the Rio Olympics that sent gold prices skyrocketing in June this year, but something much less glamourous – waves of political uncertainty as Britain voted by the slimmest of margins to leave the European Union. Once the vote counting started and reality began to dawn, gold made its move with the price rising US$41 higher in one hour. Global politics resulted in gold’s the highest monthly close since June 2014.
During June, the price made a historic high of $1846, but political turmoil in the UK can’t take all the credit for sending gold soaring. At home in Australia, there was other economic and finance news that added to gold’s ‘safe haven’ lustre:
- The week ending June the 3rd saw the worst Non-Farm Payrolls since 2010, with only 38,000 jobs created.
- US Treasury yields fall to a low of 1.57 percent before recovering in the latter half.
- The month ended with poor Core and Non-Core Durable Goods figures , with CDG at -0.30 per cent instead of an expected 0.10 per cent and Durable Goods down -2.20 per cent versus an expected decline of 0.50 percent.
It all led to a decline in expectations of further interest rate rises by the USA’s Federal Reserve and when the World’s stock markets are jittery, gold is always viewed a safe place for investors go.
From a technical perspective, the price spike at the very end of the month climbed through a downwards trend and subsequently, price targets to US$1425 started to look more achievable than they did at the beginning of the month.