COVID-19, Stimulus Package Create Mixed Fortunes for MetalsBy MBN Staff | Mon, 12/21/2020 - 15:56
Mining’s metal prices experienced wildly different Mondays as news of the US stimulus package agreed on Sunday bolstered markets, before worries over the new COVID-19 strain dragged them down again.
Concerns shaking global markets following the announcement of a new strain of COVID-19 found in the UK have also delivered blows to the industrial metals market. Copper took a one of the hardest hits with benchmark copper dropping 1.7 percent to US$7,853 on the London Metal Exchange by 11:00 CST, reported Reuters.
The stock of Grupo Mexico, the fourth largest copper producer in the world, dropped by 0.37 percent to US$4.18 on Mexico’s Bolsa de Valores as of 13:30 CST. This initial drop is unlikely to concern copper producers or traders too much following the metal’s rise to US$8,028 last week – its highest valuation since 2013 – but worries will mount should the new virus mutation cause widespread lockdowns.
Meanwhile, gold had enjoyed a good weekend after many months of failed deliberations and finger pointing from both sides ended with the US Congress reaching a deal on a US$900 billion COVID-19 relief package on Sunday. In response, gold prices rose to a six-week high, with spot gold jumping 0.9 percent to US$1,896.56 per ounce when European markets opened. "Now that we have got fiscal stimulus behind us, gold has enough momentum to close above US$1,900 by year-end and it could climb up to US$1,925," Stephen Innes, Chief Global Market Strategist at financial services firm Axi, told Reuters.
However, gold’s luck was not set to last. The appetite that pushed gold prices above US$2,000 per ounce for the first time, buckled. The prices for the precious metal reversed its earlier gains and fell 0.6 percent.
If the new COVID-19 strain, which is considered to be up to 70 percent more contagious than the main strain, should spread, gold prices may begin to climb again. The metal is to go-to for traders during difficult times, as its recent performance has emphasized.
Producers in Mexico are looking ahead to 2021 with optimism. Among them are Sonoro Gold, which may embark on an expanded drilling campaign at Cerro Caliche as soon as this month, after exploration efforts provided the basis for extending established gold mineralized zones.