The Bank of Canada was the latest central bank to hike rates with the U.S. tipped to follow as inflation proves stickier than bank governors expected, though whether Australia will keep rising is uncertain as political attacks on the Reserve Bank heat up.

If Australia does stop raising rates prematurely, investors could be forced to adjust to a “higher for longer” inflation scenario and reconsider what that means for gold with the quick answer being that the local gold price could move well above its current A$2920 an ounce.

Far from the giddy heights of interest rate and monetary policy, there was plenty for investors to cheer as some of the money ploughed into drilling over the past 12-months started to bear fruit with a string of market-moving announcements and broker upgrades, including:

  • WA1 Resources, which has made a potentially world-class niobium discovery in the West Arunta region of central Australia, adding 56c over the week to $5.60, but did briefly touch $6.70 on Tuesday after reporting its best drill result so far, 10 metres of 8.3% niobium starting at 79m. The stock started the year at 15c so it’s now up 4350%.
  • Nimy Resources added 14c (56%) to 38c after reporting he discovery of thick lithium-bearing pegmatites under its Mons nickel exploration project in the north of WA.
  • Adavale added 1.1c (64%) to 2.8c after reporting encouraging drilling results from its Kabanga Jirani project in Tanzania which is adjacent to the Kabanga project which has BHP as a junior partner.
  • Alvo Minerals led a red-hot rare earth sector with a rise of 18c (120%) to 32c after reporting a high-grade clay-hosted discovery in Brazil.
  • Alpha HPA added 16c to $1.10 after announcing an extension of a deal with Austria’s Ebner Group for the supply of high purity alumina for the production of synthetic sapphire glass. Bell Potter upgraded its future price forecast for Alpha from $1.31 to $1.53 and maintained a speculative buy recommendation, and
  • Solis, one of last week’s stars, continued to shine brightly as interest grew in its Jaguar lithium project in Brazil with the stock adding another 40c (104%) to 79c.

Gold, as mentioned earlier, should (eventually) be a big winner from the monetary fun and games being played by central bankers and their political masters, though this week saw little to support that view with the metal steady at US$1946/oz.

What’s got gold bugs jumping is the prospect of the U.S. Treasury flooding the market with US$1 trillion in new debt, unleashed by the recent budget deal between Democrats and Republicans, which includes a big increase in the debt ceiling.

The U.S. deal, along with Australia’s inflation fight, saw a fresh round of forecasts of how high local rates might go with Goldman Sachs and Capital Economics tipping an increase of 100 basis points over the rest of the year to a terminal rate of 4.85%.

ANZ said the latest news reinforced its argument that gold will reach US$2100/oz by Christmas which, if exchange rates stay where they are, will see the local gold price reach A$3150/oz.

The other big events this week which could shape the final few weeks of the financial year are the same two which have dogged markets for the past 18 months; the war in Ukraine, which appears to be taking a nasty turn, and concern that China is not emerging quickly (or at all) from its slowdown.

The news from China this week, including a steep fall in exports, is not encouraging and could have an effect on the Australian economy.

Weak global demand for its manufactured goods saw total Chinese exports drop by a shock 7.5%, wiping out gains made in the previous two months.

Goldman Sachs was quick to pounce on the China data, telling clients that reduced exports could create a commodity surplus with iron ore likely to be hit hard event as the steel-making material added US$5 a tonne to US$109/t, the highest in six weeks.

According to Goldman, falling Chinese exports will be a factor in the short-term iron ore price falling sharply with the bank now targeting a short-term price of US$90/t, down from an earlier price tip of US$110/t while the three-month price could drop to $80/t.

The miners shrugged off Goldman’s warning with Fortescue adding 80c over the week to trade at $20.34 while Champion Iron put on 16c to $6.04. The big two of iron ore, BHP and Rio Tinto, also gained ground, BHP by $1.21 to $44.07 and Rio by $4.12 to $113.25.

Interest in Fortescue was intensified by reports that its mercurial founder and chairman Andrew Forrest is busy orchestrating a “liquidity event” with the possible sale of a stake in one of his energy business units, Squadron Energy, to take advantage of investment fund enthusiasm for renewables.

Battery and technology metals fared best this week though at least one stockbroking firm sees clouds forming.

Morgans warned in a research note that the lithium rally could run out of steam because prices for lithium chemicals in China have stopped rising and there is a risk that already-announced deals involving lithium assets might not proceed.

“Electric vehicle demand needs to grow much faster to keep (battery metal) prices high,” Morgans said. “Our view is that unless demand growth accelerates rapidly, lithium prices will not make meaningfully larger gains and, in fact, they may soften further as production capacity increases in 2024.”

Pilbara Minerals was the pick of the lithium pack with a 20c rise to $4.67 but most lithium stocks struggled. Allkem rose by 76c to $15.39 while Liontown was down 6c to $2.72.

Other lithium news and price moves included:

  • Patriot Lithium added 4c to 28c after reporting significant anomalous lithium readings from geochemistry over multiple pegmatites at its Wickenburg project in Arizona.
  • Green Technology Metals slipping 3c to 69c despite announcing a maiden mineral resource estimate of 8.1 million tonnes of lithium ore assaying 1.32% at its Root Bay project in Canada. Bell Potter upgraded its price forecast from $1.38 to $1.46.
  • Scorpion Minerals slipped 0.1c to 6.8c after announcing the appointment of mining industry veteran Michael Fotios as chief executive.
  • Charger Metals lost 10c to 40c after filing a drilling update on its Bynoe lithium project in WA, and
  • Atlantic Lithium was steady at 60c after an optimistic review of its Ewoyaa project in Ghana from Wilsons, a stockbroking firm, which has a price target on the stock of $1.10.

Gold stocks firmed marginally as corporate activity again took centre stage, this time with an unsolicited $177 million takeover bid from Westgold Resources for Musgrave Minerals.

In keeping with text book theory, the target rose with Musgrave up 8c to 31c and the bidder fell, with Westgold down 19c to $1.44.

Other gold news and share price moves included:

  • Perseus Mining shedding 9c to $1.82 after announcing the deferral of its Meyas Sand project in war torn Sudan.
  • M3 Mining adding 1.5c to 13c after announcing encouraging gold results from scout drilling at its Edjudina project in WA including 20m at 5.7g/t from a depth of 24m.
  • Bellevue slipped 2.8c to $1.31 after announcing receipt of final approvals for its namesake project in WA with RBC Capital Markets tipping a target price of $1.50, and
  • Evolution Mining losing 10c to $3.43 despite an upbeat investor day and buy tip from Morgan Stanley which sees the stock rising to $3.75.

Other news and market moves included:

  • Carnaby Resources, up 13c to $1.18 after reporting fresh high grade drill intersection from its Mount Hope copper project in Queensland with a best hit of 117m at 2% copper.
  • Dynamic Metals reported encouraging nickel assays from drilling at its Lake Percy project in WA with best result of 16m at 1.11% nickel from a depth of 32c. The stock added 3c to 28c.
  • Drilling contractor Perenti added 8c to $1.20 after its annual strategy day unveiled positive growth.
  • Bindi Metals rose by 1c to 19c after reporting strong copper assays from drilling and rock chip sampling at its Biloela project in Queensland, and
  • Cygnus Metals added 2.5c to 22c after reporting high-grade rare-earth intersections from drilling at its Bencubbin project in WA with a best hit of 19m at 1541 parts per million (0.154%) total rare earths.