Precious Metals Update: Gold & Silver
Currently Gold is hovering around $4,290/oz and silver close to $68.50/oz as investors, market participants and traders analyze a slew of macroeconomic updates this week.
The factors influencing price changes are: Fed's tough stance on inflation The Federal Reserve kept the rate unchanged but has indicated that there might be rate hikes to the future, with half of the FOMC members projecting rate increases this year. Chair Kevin Warsh pointed out that the Fed is resolute in bringing inflation back to 2%, which has led to decline in precious metals due to rising yields on bonds.
Global political situation easing President Trump has signed an interim pact with Iran to reopen the Strait of Hormuz and allow the selling of Iranian oil without the sanctions. The news helped silver to work its way back above $69 Thursday after it dipped by 3% the previous day. Industrial demand is still robust and the production of AI infrastructure and energy storage for Chinese markets are two examples of silver consumption. This has helped to dampen some of the effects of tighter monetary policies.
The broad view: Although metals fell by 57% over the last few weeks due to some corrections, both of them are still Much higher when compared to last year, - gold gaining approximately 27% and silver about 88%. Many are forecasting silver to be priced around $83/oz in the next year due to increasing industrial usages and investment inflows for inflation hedges.
Continued negotiation between persistent inflation and increasing real interest rates will probably result in further high volatility. If one looks at the longer lifespan, pullbacks as these have been accumulation occasions in the past.
Your opinion - is this a consolidation phase before the next big move up or more downward focus in the days to come?
Josh Perez
Managing Director
Chief of Global Trading
Aurica Inc.