Easter Break

Metal markets were weak ahead of the Easter holiday period, with gold a casualty as investors moved back into riskier assets on rising hopes of a US-China trade deal and on stronger economic signals in China and Germany.

Apr 22, 2019
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Metal markets eased significantly in the week leading up to the Easter break. The price of gold (which had reached US$1,322/oz on March 25, and was US$1,310/oz as recently as April 10) slumped on Tuesday, April 16, from US$1,288/oz to US$1,275/oz. The price entered the Easter holiday period at US$1,276/oz, down 1.8% compared with the previous Friday's close in London. The precious metal opened stronger on Monday but subsequently fell back again.

Although gold captured most of the headlines, other metals fell faster. Zinc and iron ore (62% Fe) were the weakest, falling 4.5% and 4.2%, respectively, to US$2,795/t and US$91.8/t. Nickel was off 2.7% at US$12,660/t and copper slipped 0.7% to US$6,465/t. Amongst the major metals only aluminium was up on the week, improving 0.2% to US$1,868/t.

Analysts attributed the weak metals markets to a move back into riskier assets, including equities, with rising hopes for a US-China trade deal. Markets were also buoyed by the better than expected growth in the Chinese economy in the March quarter (GDP grew 6.4%) and a surge in Chinese house prices. Reuters reported that house prices in 70 Chinese cities increased by an average of 10.6% year on year in March. This is the largest increase since April 2017, and the latest indication that the local economy is rebounding.

It also seems that the worst has passed for the German economy, with the ZEW indicator of economic sentiment moving into positive territory in March for the first time since March last year.

Mining Moves

Newmont Mining Corp. has completed its US$10 billion all-scrip acquisition of Goldcorp Inc., creating Newmont Goldcorp Corp., a company with the world's largest gold reserves and resources. With operations in the Americas, Australia and Africa, Newmont Goldcorp said on April 18 that it expects to produce 6.0-7.0 Moz/y over the next 10 years. The combined group expects to achieve US$365 million in annual pretax savings through synergies, supply chain efficiencies and potential improvements.

Barrick Gold Corp., which had launched a short-lived hostile bid for Newmont in late February, has agreed to form a joint venture for the two companies' core gold mining assets in Nevada. This Nevada joint venture is mooted to deliver an average US$500 million in annual synergies in the first five years of operations. 

The Minerals Council of South Africa is reported by Mining Weekly to have urged the country's government to delay for at least five years the implementation of a new carbon tax to allow it enough time to finalise the appropriate regulations.

Chris Hinde

Chief Commentator, Mining Beacon

Previously editorial director of Mining Journal, and more recently head of S&P Global Market Intelligence's metals and mining team, Chris is now Mining Beacon's editor-in-chief and lead commentator. He posts two blogs every week, one on Monday reviewing market conditions over the prior week, and a second on Thursday looking at issues on the global mining scene. There is also a quarterly blog on business opportunities in the sector.

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