The gold price remained fairly steady this week after last week’s brief uptick, largely trading between US$4,000 and US$4,100 per ounce.
As is often the case, its sister metal silver was more volatile, jumping briefly above the US$52 per ounce level midway through the period.
The precious metals faced some pressure on Thursday (November 20) after the release of September US jobs data. The Department of Labor report, which was delayed due to the government shutdown, came in stronger than expected, with nonfarm payrolls increasing by 119,000 for the month — more than double the gain of 50,000 estimated by analysts.
The jobs numbers have dampened expectations that the US Federal Reserve will cut interest rates at its December meeting, as have minutes from the central bank’s latest meeting.
‘This (data) essentially confirms what the Fed discussed in October — a slowing yet stable jobs market. A December rate cut now appears increasingly unlikely’ — Peter Grant, Zaner Metals
The minutes highlight the divide among Fed officials, who were not all in favor of October’s rate reduction. They also state that while ‘several participants’ believe lowering rates could be appropriate next month, ‘many’ want to leave rates unchanged.
Fed Chair Jerome Powell said previously that a December cut isn’t a ‘foregone conclusion.’
Aside from that, the minutes indicate broad approval for the end of quantitative tightening (QT) on December 1. Adrian Day of Adrian Day Asset Management highlighted the end of QT in our recent interview, saying that he sees a potential transition to quantitative easing ahead.
Bullet briefing — Barrick faces turmoil, MP does Saudi refinery deal
Barrick Mining faces more turmoil
Turmoil continued for gold and copper producer Barrick Mining (TSX:ABX,NYSE:B) this week after a series of company developments made headlines.
First, Reuters reported that Barrick’s board is considering splitting the company into two different entities: one focused on North America, and the other on Africa and Asia.
Four sources familiar with the firm’s thinking told the news outlet that Barrick’s African assets could also be sold outright, as could the Pakistan-based Reko Diq mine — essentially undoing Barrick’s 2019 merger with Africa-focused Randgold Resources.
Barrick didn’t respond to requests for comment, but later in the week news hit that activist investor firm Elliott Investment Management has taken a ‘large stake’ in Barrick.
Sources told the Financial Times that Elliott is now among Barrick’s 10 top investors, meaning its stake is worth at least US$700 million. Elliott hasn’t shared information about what it would like Barrick to do, but is reportedly ‘encouraged’ by the idea of breaking the company in two.
Barrick has faced numerous headwinds recently, including the seizure of a key gold mine in Mali and the departure of CEO Mark Bristow. Bristow, who took the helm at Barrick after it joined forces with Randgold, abruptly stepped down in September after facing criticism.
Although shares of Barrick are up close to 130 percent year-to-date, the company has underperformed compared to its peers in the gold space.
Bristow is not the only person to leave Barrick lately — the last piece of news about the company this week is that two senior managers and a top executive have departed. CEO Mark Hill announced the changes in a memo seen by Bloomberg, saying the company is looking to evolve its operating model so that it’s in line with strategic priorities.
MP’s latest rare earths deal
Rare earths miner MP Materials (NYSE:MP) and the US Department of Defense are teaming up on a strategic joint venture with Saudi Arabian Mining Company (Maaden).
The deal, which will see the three entities collaborate on a Saudi Arabian rare earths refinery, comes after the US and Saudi Arabia signed a strategic framework on securing critical supply chains. The refinery will process rare earths feedstock from Saudi Arabia and elsewhere, and will be able to produce both light and heavy rare earths.
Under the Trump administration, the US has ramped up efforts to break China’s rare earths dominance, boosting relationship with MP Materials in the process — in July, the defense department agreed to buy US$400 million worth of preferred stock in the company, a move that MP called a ‘transformational public-private partnership.’
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.