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Wednesday, December 6, 2023

Top Stories This Week: Gold Reacts to New Inflation Data, Biden Admin Seeks US Mining Reforms

Gold saw peaks and troughs this week, falling as low as US$1,903 per ounce on Thursday (September 14) before recovering to about US$1,925 on Friday (September 15), level with its price at the start of the period.

The consumer price index (CPI) was in focus mid-week, with the latest data from the US Bureau of Labor Statistics showing that it rose 0.6 percent month-on-month in August, the first time it’s increased since February. On an annual basis CPI was up 3.7 percent, which was in line with estimates and the smallest uptick in about two years. Core CPI, which many experts believe is a more accurate gauge of inflation, was up 0.3 percent from July and 4.3 percent from the previous year.

The US Federal Reserve still has a 2 percent inflation target, which means it’s hotter than the central bank would like. As the Fed gears up to meet from September 19 to 20, some market participants are wondering whether another hike is in the cards.

It’s impossible to say for sure, but that currently looks unlikely — CME Group’s (NASDAQ:CME) FedWatch tool shows a 97 percent probability that the Fed will leave rates unchanged. We’ll be keeping an eye on what happens, so stay tuned.

Biden administration seeks US mining reforms

This week also brought the release of a report from a federal committee in the US. The document, which was put together by an interagency working group, includes recommendations aimed at reforming the country’s mining industry.

“The biggest takeaway from our report is that our 150-year-old-law, the 1872 mining law, needs to be reformed and brought into the 21st century” — Tommy Beaudreau, US Department of the Interior

The 168 page report includes over 60 recommendations for Congress and federal agencies. One idea that’s been receiving a lot of attention is the imposition of a 4 to 8 percent royalty on hard-rock mining on federal lands; another is the proposal to transition from the current claim system to a hard-rock mineral leasing system, again for federal lands.

While the working group believes those and other changes would help increase domestic supply of critical minerals while improving environmental, labor and community standards, leaders in the mining industry have reacted less positively.

Rich Nolan of the National Mining Association said the suggested alterations would have the opposite effect — slowing down projects and forcing the US to import more key commodities.

“Unfortunately, if the Biden-Harris administration’s stated objective is to secure our nation’s domestic mineral supply chains while supporting responsible mining, the recommendations contained in this report don’t do anything to advance the ball” — Rich Nolan, National Mining Association

Developments like this highlight the ever-increasing tension between appropriate legislation and the desire to develop local sources of the commodities needed for the energy transition. So far the working group has only made suggestions, and there is no guarantee they’ll move forward — we’ll have to wait and see.

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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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