Gold News

Gold Sets Best Week in 12 But Nvidia Soars as 'AI Hits Tipping Point'

The PRICE of GOLD BULLION rose Friday in London, marking its best week in 12 but lagging the fresh all-time highs in global stock markets after AI chip-maker Nvidia posted quarterly earnings even stronger than the tech-stock darling's analysts expected.
"Accelerated computing and generative AI have hit the tipping point," claimed Nvidia (Nasdaq: NVDA) founder and CEO Jensen Huang in Thursday's press release.
"Demand [for artificial intelligence applications] is surging worldwide across companies, industries and nations."
With NVDA now trading over 236% higher from this time last year, information technology stocks in the US-listed S&P500 index have risen by 57.0% over the past 12 months.
The rest of the index has added 17.7%.
Added together, the 'Magnificent 7' – coined by celebrity stock picker Jim Cramer for Microsoft (Nasdaq: MSFT), Apple (Nasdaq: APPL), Nvidia (Nasdaq: NVDA), Amazon (Nasdaq: AMZN), Alphabet (Nasdaq: GOOG), Facebook (Nasdaq: META) and Tesla (Nasdaq: TSLA) – opened Friday worth almost $13.5 trillion in total.
That tops by more than $1 trillion the combined 2023 economic output of Germany, Japan and India – the world's 3rd through 5th largest GDPs – and it matches over 99% of the total value of every corporation listed on the Shanghai, Shenzhen and Hong Kong stock markets in China, the world's 2nd largest economy and No.1 export nation. 
The market cap of the Magnificent 7 also comes within 3% of the spot-market value of all the gold ever mined in history, now estimated at a little over 212,000 tonnes.
Steel mills worldwide turned out more than 199,000 tonnes every hour of that metal in January.
Market cap of the Magnificent 7 US tech stocks vs. all the gold ever mined, the world's 3rd to 5th largest national GDPs, and all the stocks in China. Source: BullionVault
"Nvidia is the story everywhere," says strategist Nicky Shiels at Swiss precious metals refining and finance group MKS Pamp, comparing the AI chipmaker against natural resources stocks and finding that its market capitalization is now "equal to 5 Exxon Mobils (when net income of NVDA is $30bn vs XOM at $36bn), 9 BHPs and 77 Barricks!"
"[Such] super low sentiment in commodities is nothing new...with comparisons to mid-1990s, 2000-2002 and 2015-2019. [But] gold is also being wrapped up in the 'commodity-off' sentiment even though it's sitting just beneath all-time-highs [and] fundamentally, physical demand remains insatiable, steady and increasingly price insensitive."
Trading 1.5% higher from last Friday's closing price in London, gold bullion rose into today's afternoon benchmarking process, suggesting strong demand over supply in the first round of the auction and fixing above $2027 per Troy ounce.
Silver prices in contrast lost 1.3% over the 5 sessions to Friday's noon benchmarking in London, reversing almost all of last week's 35 cent gain to stand $1 lower per ounce across 2024 so far at $22.70.
So-called crypto currency Bitcoin meantime dropped 1.8% from last Friday
"A surge of interest in Bitcoin exchange-traded funds is prompting some investors to swap out holdings in gold-backed ETFs," claims an article at Reuters.
Giant gold-backed ETF the SPDR Gold Trust (NYSEArca: GLD) yesterday shrank in size for the 9th session in 15 so far in February, reaching a new 4.5-year low needing less than 828 tonnes of bullion backing.
The UK gold price in Pounds per ounce today rose back above £1600 while the Japanese Yen price of gold set yet another new high and the Euro price of bullion edged close to 2-week highs at €1879.
Pushing back against "big tech" with its new Digital Markets Act (DMA) competition laws from 7 March, the European Union – now targeting US tech giants Google, Amazon, Meta and Microsoft, together with Chinese-owned TikTok parent ByteDance – is expected to fine Apple €500 million for highlighting its own streaming music service over Swedish competitor Spotify on its mobile-phone apps store.
Watch or listen to our Gold Market Reports on YouTube.
Alongside Nvidia's earnings results this week, UK-listed commercial bank (and London bullion market maker) Standard Chartered (LON: STAN) beat forecasts with an 18% rise in annual profits. But shares in HSBC (LON: HSBA) fell hard after it reported a heavy write-down on its investment in a Chinese bank.
Germany's Pfandbrief bank is meantime seeing "serious credit stress" with its Tier 1 bonds trading at just 20 cents on the dollar amid a 62% stock crash driven by its exposure to US commercial real estate.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver, platinum and palladium market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn



Market Fundamentals