COLUMN-Gold and iron ore are doing equally well. Their miners are not – by Clyde Russell (Reuters U.S. – June 15, 2020)

https://www.reuters.com/

LAUNCESTON, Australia, June 15 (Reuters) – Gold and iron ore are the standout commodities so far this year, but the performance of their respective miners are far more divergent – and weighted in favour of the precious metal.

Spot gold closed at $1,729.67 an ounce on June 12, up 14% since the end of last year. Meanwhile benchmark 62% iron ore for delivery to China MT-IO-QIN62=ARG, as assessed by commodity price reporting agency Argus, was at $104.45 a tonne, a gain of 14.6%.

If the year-to-date performances are very similar, the underlying drivers of iron ore and gold are quite different.

The steel-making ingredient is benefiting from China’s economic stimulus push as it recovers from the novel coronavirus, coupled with number two exporter Brazil’s struggles with the same disease.

While there is also a coronavirus element to gold’s rise, what investors are buying into is the belief that the weak global economy and expected extended recovery period mean low interest rates and heightened volatility of other asset classes.

For the rest of this column: https://www.reuters.com/article/column-russell-ironore-miners/column-gold-and-iron-ore-are-doing-equally-well-their-miners-are-not-russell-idUSL4N2DS181

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