Fool's Gold Report: Newmont Soars While Platinum-Group Metals Bounce Back

Gold only managed to gain minimal ground Friday, finishing the week below $1,300, and raising questions about whether gold can continue to post gains for the rest of the year. But Newmont Mining (NEM 0.67%) soared 4%, and platinum-group metals staged an impressive comeback after big plunges earlier in the week.

How metals moved today
Despite a modest gain in spot prices, gold futures were actually down Friday, as the June gold contract dropped $0.50 per ounce, to $1,294. May silver gained $0.08, to $19.79, but the real action was in platinum and palladium, with the latter metal rising almost 2%.

Source: Kitco. As of market close.

Image sources: Wikimedia Commons; Creative Commons/Armin Kubelbeck.

For bullion prices, fundamental considerations reasserted themselves today. In the gold market, the apparent course of U.S. monetary policy continues to point toward a gradual removal of stimulus from the economy, and the long-term result of the Fed's actions will likely be higher interest rates that make a bullion investment less attractive. Yet, in platinum and palladium, supply and demand considerations, including the threat of Russian sanctions and the ongoing strike in South Africa, played a role in the metals' gains Friday. However, some of those following the labor discussions have suggested that a resolution might be at least a little bit closer than it was.

As stockpiles of platinum-group metals diminish, it will become crucial for users to replace supplies, and that could force prices far higher. Moreover, astute investors might well jump into ETFS Physical Platinum (PPLT -1.32%), ETFS Physical Palladium (PALL 0.70%), and other bullion-tracking vehicles to capture potential gains. If enough demand removes supplies of metal from the market, those moves could themselves push prices higher, as well.

Meanwhile, on the mining front, geopolitical issues have also had a major impact. Newmont's 4% gain today stemmed from news that peer Freeport-McMoRan Copper & Gold (FCX -1.96%) had reached a resolution to its dispute with the Indonesian government over export taxes on copper that it mines at its Grasberg mine in the country. According to reports, Freeport will build a copper smelter within Indonesia, boosting the nation's capacity to make value-adding refinements to metals mined in-country, and therefore raise the value of exports. As hopes rise that Newmont might obtain an exemption from export taxes under similar terms, shareholders bid the stock higher.

For the foreseeable future, gold and other precious metals could be at the mercy of traders and the short-term focus that they have. In the long run, though, look for success from those mining companies that are best able to capitalize on opportunities even in a poor price environment, as they can boost their profits even more if metals prices return to their former levels.