Some of the ASX’s big players in the resource and energy sector are down today.
Shares for Woodside Petroleum Ltd [ASX:WPL] are down over 3% at time of writing. Woodside Petroleum is an Australian oil and gas producer.
BHP is a natural resources company producing minerals like iron ore as well as oil and gas exploration. Rio Tinto is a large iron ore producer.
Why are their shares down today?
At the heart of the concern for both iron ore and oil is how COVID-19 could affect demand in the future as the global economy slows.
Shares for Woodside are down after oil prices fell again. The West Texas Intermediate dropped by more than 6% since Friday, from US$19.78 to US$18.50 at time of writing. WTI was trading at around US$61 at the beginning of the year before the market got hit with oversupply that pushed prices to plummet.
Iron ore prices are trading at around US$82.50, much lower than last year when ore prices jumped to over US$120 after a dam burst in Brazil, driving Vale to stop production affecting global supply.
We could see lower iron ore prices in the near future.
Yahoo Finance reported on Thursday:
‘Spot prices of iron ore with a 62% iron content for delivery to China stood at $84 per tonne on Wednesday and are expected to decline to $75 by the fourth quarter, according to BMO Capital.
‘Prices could remain firm in the short term, but the impact of closed steel furnaces and improving supply is due to gradually chip away at prices.[…]
‘While Chinese steel production has held up, lockdowns elsewhere have spurred steelmakers to close furnaces as demand from their customers such as automakers dried up. In March, crude steel production dipped by 1.7% in China, but tumbled by 20% in the European Union and 10% in Japan.’
While some of our large energy and resource companies are trading lower today, one area is shining bright
That’s our gold miners.
Gold Road Resources Ltd [ASX: GOR], Saracen Mineral Holdings Ltd [ASX: SAR] and Evolution Mining Ltd [ASX: EVN] are all up over 6% at time of writing.
Demand for gold has been increasing as fear feeds into the markets, pushing gold prices higher.
Also, the Australian dollar has been moving lower against the US dollar, which gives gold investors in Australia an extra perk. Year-to-date gold prices in Australian dollars have increased by over 22%.
Could the gold price keep going higher? In an exclusive interview, author and gold expert Jim Rickards explains why he thinks gold prices could reach US$10,000.
You can watch the interview here.