Gold News

Gold +1.7% in May, Silver +17% as Copper Sinks, Kremlin Warns West of 'Final Conflict' Again

GOLD PRICES erased a brief $15 spike Friday afternoon in London but ended May with a 1.7% rise in US Dollar terms at a new month-end record as silver added over 17% while copper sank from its new all-time highs, global stock markets cut their gains, but bond prices rebounded amid a raft of weak global economic data and worsening geopolitical tensions.
 
"This is not intimidation or a nuclear bluff. The military conflict with the West is developing according to the worst-case scenario," said former Russian President and key Kremlin insider Dmitry Medvedev, repeating his threats of nuclear war after the USA and Germany both approved the use of weapons they supply to Ukraine for striking targets in Russia as Kyiv tries to reverse Moscow's recent gains in its attempted invasion of the would-be EU and Nato member state.
 
"Today no one can rule out the transition of the conflict to its final stage."
 
China's Defense Minister Dong Jun meantime told US Secretary of Defense Lloyd Austin to stop "interfering" in Taiwan – encircled by Chinese military drills last week following the election of pro-independence President Lai Ching-te – as the 2 sides met for face-to-face talks for the first time since 2022.
 
Rallying 0.1% from last Friday's 3pm benchmark auction in London, the gold price today fixed around $2346 per Troy ounce, beating April's end-month record by almost $40.
 
Betting that the Federal Reserve will start cutting US interest rates in September jumped above 55% of betting on CME futures contracts after inflation data on the core PCE measure held at 2.8% per year for the 3rd month running.
 
The Chicago Fed's PMI index of regional manufacturing activity has now sunk to 35.4 points, the worst since May 2020 – depths of the global economy's Covid – after signalling month-on-month expansion with a reading above 50 only once since August 2022.
 
Chinese warehouse stockpiles of copper – the metal 'with a PhD in economics' thanks to its use across construction and industry worldwide – have risen to 322,000 tonnes this month according to data from the Shanghai Futures Exchange, almost 3 times the average May level of the past 5 years.
 
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Copper prices on Friday sank further from mid-May's record highs, slashing this month's gain from 12.0% to just 1.5%.
 
Silver prices had earlier recorded a 17.3% benchmark leap across May – the fastest month-on-month rise since December 2020 – fixing at noon in London around $31.25 per Troy ounce, the highest month-end price since New Year 2013.
 
 
Chart of copper vs. silver price in US Dollars. Source: TradingEconomics
 
Silver then shot higher with gold Friday afternoon, adding 50 cents per ounce – but peaking 2.2% shy of Tuesday-last-week's fresh 12-year spot market high – before retreating with the 'safe haven' metal into Friday's market close.
 
China's CSI300 share index meantime erased the last of May's previous 2.4% rise to 6-month highs, closing the day 0.4% lower at what was a 4.5-year low when hit in last autumn's plunge.
 
"Investor confidence in China's A-share market has yet to substantially improve," says the government-controlled China Daily, urging "further limits" on stock-lending to curb bearish short selling as rules restricting "securities refinancing urged" were re-imposed today.
 
Canada's economic growth for January-to-March was today estimated 1.7% annualized, half-a-point below analyst forecasts and boosting expectations that the central bank in Ottawa will next week cut its key interest rate from today's 2-decade high of 5.0% per annum.
 
Next Thursday's meeting of the European Central Bank looks set to deliver a "hawkish rate cut" says analysis from French bank Natixis, with higher bond yields, "positive" trends in business sentiment and activity PMI surveys, plus today's above-forecast inflation estimate meaning that the 20-nation ECB will stress its "data-dependent" stance following the move.
 
The Euro gold price on Friday showed almost no change from the end of April, fixing around €2158 as the UK gold price in Pounds per Troy ounce also held flat across May at £1839.
 
Western government bonds meanwhile reversed the price drop which followed this week's weak investor demand at an auction of new US Treasury debt, pulling Washington's 10-year borrowing costs almost 0.2 percentage points lower from the end of April at 4.50% per annum.
 
So-called real rates – as tracked by the yield on 10-year US inflation-protected TIPS bonds – fell to 2.14% per annum, down from end-April's level of 2.28% despite this month's chorus of 'hawkish' comments on keeping overnight rates higher for longer from Fed officials.
 

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum 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.

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