As of recent trading, gold gained approximately 0.3%, surpassing $2,665 an ounce, eclipsing its previous all-time high set on Tuesday. This surge followed a report indicating that U.S. consumer confidence experienced its largest decline in three years. Silver also experienced a notable increase, rising 4.6% on Tuesday—its most significant daily gain in four months.
Market participants in swaps have ramped up their expectations for more than three-quarters of a point of easing from the Federal Reserve this year. Lower interest rates typically benefit gold and silver, as these metals do not yield interest, and a weaker dollar makes them more affordable for international buyers.
Gold and silver often move in tandem due to their similar roles as hedges against macroeconomic uncertainties and currency fluctuations. However, silver’s performance is also closely tied to industrial demand, given its applications in clean energy technologies, including solar panels.
The boost for industrial metals comes in light of China’s announcement of stimulus measures aimed at alleviating economic challenges, particularly within the real estate sector.
Zhong Liang Han, an analyst at Standard Chartered Plc, remarked, “The primary catalyst for silver’s performance in recent weeks has been the rally in gold, which received another lift yesterday from heightened rate-cut expectations following the weak consumer confidence report.” He noted that the surge in industrial metals, fueled by China’s broad stimulus package, was a key factor in silver’s upward momentum.
This year, gold has surged nearly 30%, while silver has increased by 35%. The upward trajectory for both metals gained momentum following the Federal Reserve’s half-point rate cut last week. Additionally, strong purchases from central banks and escalating geopolitical tensions have heightened demand for these safe-haven assets, especially with the highly consequential U.S. presidential election approaching in less than six weeks.
Spot gold reached an all-time high of $2,665.25 an ounce before settling at $2,662.77, up 0.2% as of 10:34 a.m. in Singapore. The Bloomberg Dollar Spot Index remained relatively unchanged following a 0.5% decline in the previous session.
Investors are increasingly focused on silver, particularly due to gold’s impressive rally and the potential for catch-up buying opportunities. Joni Teves, a precious metals strategist at UBS Group AG, noted, “The movement in industrial commodities is likely providing additional support. Our bullish outlook for silver remains unchanged; we believe it can outperform in this environment characterized by rising gold prices, anticipated Fed easing, and projected deficits in the silver market.”
However, silver dipped 0.5% to $31.9435 an ounce in Singapore, while palladium and platinum also experienced declines. Looking ahead, investors are awaiting further U.S. economic data, including the personal consumption expenditures index and jobless claims, later this week for additional insights into the Fed’s likely easing trajectory.
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