(Kitco Commentaries) - Palladium was the best-performing precious metal of the week, up 13.65%.
Strengths
- Generation Mining improved its outlook as palladium surged nearly 10%, its biggest gain since May 2023, thanks to gold’s record-breaking move above $4,000 per ounce. The rally signaled renewed investor interest in precious metals. Generation Mining’s appointment of Clinton Swemmer as Vice President of Projects adds over 25 years of experience to help advance the Marathon Copper-Palladium Project with discipline and strong exposure to rising palladium prices.
- According to Canaccord, K92 Mining reported quarterly production of 44,300 ounces of gold from its Kainantu Gold Mine in Papua New Guinea, a 30% increase from the previous quarter. Having already produced more than 80% of its annual target in the first three quarters, K92 appears on track to meet its 2025 guidance of 160,000 to 185,000 ounces of gold.
- Spot silver prices jumped to their highest level in decades as strong demand for safe-haven assets worsened supply shortages in the London bullion market. Silver climbed as much as 2.3% past $50 an ounce on Thursday, the highest since the Hunt brothers’ historic squeeze in the 1980s, according to Bloomberg.
Weaknesses
Silver was the worst-performing precious metal of the week, down just 0.48%. Despite the modest dip, silver’s rally remains impressive: prices have surged past $50 for the first time since the Hunt brothers’ infamous 1980 cornering attempt, up 66% year-to-date and outpacing gold’s record-breaking run. A growing physical shortage, reflected in one-month lease rates spiking to 35%, along with booming industrial demand from China’s electric vehicle (EV) and solar sectors, has fueled what some are calling a “New Silver Hunt.” ETF inflows and bullish forecasts suggest the rally could continue.
- Barrick Gold announced the sale of its Tongon Mine in Côte d'Ivoire to a private Ivorian company for up to $305 million. While the sale was expected, the price came in below estimates—BMO’s $529 million net asset value (NAV) and the consensus estimate of $488 million.
- Dundee Precious Metals faced challenges after the Ecuadorian government revoked the environmental license for its Loma Larga gold project. Government spokesperson Carolina Jaramillo said the decision was based on studies by local authorities but emphasized that mining companies complying with their contracts have no reason to fear losing their licenses.
Opportunities
- Bank of America projects that strong free cash flow (FCF) generation in 2025 will lead to higher shareholder returns. Total capital returns among North American precious metal producers are forecast to rise 67% to $9.7 billion, including $5.7 billion in share buybacks and $4.0 billion in dividends.
- The Wall Street Journal published a story titled “Gold Is a Hedge Against Central Banks.” Interestingly, it wasn’t about central banks buying gold at all, focusing instead on Japan’s new leader, Sanae Takaichi, who advocates for policies to make national debt more manageable, likely through lower interest rates. Her stance suggests a shift toward government-led economic direction, similar to President Donald Trump’s interventionist approach. If Japan, one of the world’s largest economies, pursues such a policy, it could fuel global inflation, further supporting gold.
- UBS analysts noted that if spot gold holds above $4,000 per ounce, they would raise their fiscal-year 2026 and 2027 forecasts by 7% and 11%, respectively, while consensus forecasts could rise 9% and 13%. Although cost inflation has largely caught up to the industry, continued production growth and free cash flow generation should keep gold miners attractive. UBS expects strong balance sheets and healthy cash generation to support ongoing shareholder returns.
Threats
- Gold’s rapid climb toward $4,000 per ounce has been driven by political instability, falling bond yields, and strong central bank buying. Analysts warn that prices may soon consolidate. Events such as a potential U.S. government shutdown, unrest in France, and leadership changes in Japan have all contributed to the rally, while the People’s Bank of China continues expanding its gold reserves, according to Bloomberg.
- Bank of America also warns that several technical indicators suggest gold’s uptrend may be losing steam. Historically, after seven straight weekly gains, gold has fallen within the following month 100% of the time since 1983.
- The bank further notes that gold is currently 70% above its 200-week simple moving average (SMA)—a condition seen only three times before (September 2011, March 2008, and May 2006), each marking major peaks followed by 20%–33% corrections. Gold is also 140% above its 200-month SMA, another signal that corrections may be due.
