Gold Steady Ahead of Fed, Experts Talk Goldman's Bearish Lithium Call


We’re kicking off this week’s update with a quick note on the annual Prospectors & Developers Association of Canada (PDAC) convention, which runs next week from June 13 to 15 in Toronto.

PDAC is always a major event in the resource sector, and we’re excited to bring you video interviews with insights from experts in the space. We’ll be updating this playlist on YouTube as they become available.

If there are any companies or people you’d like us to try to reach, drop me a message at [email protected]. And if you’re attending, say hello to us on the 700 level of the convention center.

Moving over to gold, the early part of the week was fairly steady for the yellow metal, which moved between about US$1,840 and US$1,860 per ounce. But it saw some volatility on Friday (June 10), jumping up to the US$1,870 level soon after sinking to just over US$1,830, its lowest point of the week.

Friday’s activity came on the back of the latest Consumer Price Index (CPI) data in the US. Market watchers were hoping it would show inflation is cooling down, but instead it clocked in hotter than expected at 8.6 percent year-on-year, its biggest increase since 1981. The monthly headline CPI number was up 1 percent.

The US Federal Reserve’s efforts to tame inflation will be heavily in focus next week as the central bank meets from June 14 to 15. The central bank has hiked rates twice so far in 2022, and two more are expected in June and July. Many of the experts INN has spoken to are skeptical that the Fed will see success as it tries to tame high prices.

As we wrap up, I want to touch on the lithium market, which was recently rocked by bearish comments from Goldman Sachs (NYSE:GS). Despite widespread positive sentiment, the firm is calling for a “sharp correction” in prices by 2023, and said the battery metals bull market is over for now.

INN’s Priscila Barrera reached out to experts in the space, many of whom took issue with Goldman’s findings. While prices for lithium may even out, the commentators generally don’t expect to see the big drop anticipated by Goldman, and supply isn’t seen catching up up with demand in the near term.

“The only way we see the market being balanced in the near future is if there is electric vehicle demand destruction, and that is unlikely” — Rodney Hooper, RK Equity

It’s worth noting that this isn’t the first time a major investment bank has made a negative call on lithium — back in 2018, oversupply concerns prompted Morgan Stanley (NYSE:MS) to predict a decline in prices by 2021.

“We’ve seen this before, we will see it again,” said Simon Moores of Benchmark Mineral Intelligence in a tweet. “You can’t just add up all the lithium mine level potential and make an oversupply call.”

Our Twitter followers agree — when we asked them if they think Goldman’s call is correct, the vast majority said no. However, a number of voters did point out that the comments were nevertheless damaging for lithium stocks.

We’ll be asking another question on Twitter next week, so make sure to follow us @INN_Resource and follow me @Charlotte_McL to share your thoughts!

Want more YouTube content? Check out our YouTube playlist At Home With INN, which features interviews with experts in the resource space. If there’s someone you’d like to see us interview, please send an email to [email protected].

And don’t forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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