What could slow the red-hot resource sector?
While metal prices are off to a great start, the resource sector could be slowed by central banks and congressional grid lock, noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable with correspondent Paul Harris and Faraday Copper CEO Paul Harbidge.
Metals have had a great start to the year. Gold hit a nine-month high on Friday with the precious metal ending the week in the $1,920 range. Kitco columnist Jim Wyckoff said the yellow metal bulls are quietly starting to discuss gold setting a new record high. The yellow metals would need to add another $100 to get there.
This week copper hit its highest price since June. It ended the week trading around the $4.20 a pound level.
But the current metal price spike could be cooled. The president of the European Central Bank, Christine Lagarde, said this week that central banks will “stay the course” on interest rate increases to keep bringing down inflation rates. That work could be harder with oil prices creeping higher due to China opening up after COVID lockdowns. A barrel of oil is now trading in the low 80s.
There is also a debt stand off. The U.S. government hit its $31.4 trillion borrowing limit on Thursday. The Republican-controlled House of Representatives and President Joe Biden's Democrats are bogged down on whether to lift the debt ceiling. Without action, a fiscal crisis could ensue.
Treasury Secretary Janet Yellen has already deployed special measures to manage cash and stave off default, which she said could come by June.