Gold News

Gold and Silver Snap Price Connection as Stock Markets Slip, Copper and Oil Rise Ahead of the Fed

GOLD PRICES slipped but silver rose on Friday, snapping the precious metals' more typical connection for both the day and the week as global stock markets pulled back from their latest all-time highs but industrial commodities gained ahead of next week's interest-rate decision and 'dot plot' forecasts from US central bank the Federal Reserve.
Gold bullion slipped 0.5% for the week from last Friday's 3pm London fix, trading at $2161 per Troy ounce and heading for its first weekly drop in 5 after snapping a 6-day run of new all-time gold records on Tuesday.
The silver price in contrast added more than 25 cents at today's 12 noon benchmarking from Thursday's level, adding another 3.0% to last week's 7.8% jump and hitting the highest since early December at $25.44 per Troy ounce in spot-market trading.
Day-to-day, silver and gold prices have moved in the same direction almost 76% of the time since the start of 2019, a pattern matched by their week-to-week movements too.
"I personally think we're going to need a bit of recovery in China" for silver to keep pushing higher, says strategist John Reade – formerly at UBS and Paulson & Co. and now at the mining industry's World Gold Council.
"Its industrial demand for silver is so important that if the economy there is lagging, that might tend not to make [continued price gains] happen."
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Silver in Shanghai today fixed at ¥6322 per gram, the highest Yuan price for the more industrially-useful precious metal when delivered in China, the world's No.1 manufacturing and exporting economy, since August 2020.
Daily Shanghai silver benchmark price trend, Yuan per gram at AM and PM benchmarking auction. Source: Shanghai Gold Exchange
Surging to record highs in 2022, India's demand for silver meantime appears to have been rallying from last year's retreat, says Reade.
"If that's the case, watch for [Western warehouse] inventories heading lower again for silver, and for things to get interesting."
Reaching over 8,800 tonnes in 2022 – more than 1/4 of global silver mining output – India's silver bullion imports fell to 3,625 tonnes last year.
Already this year, says the Reuters news agency today, traders have imported 827 tonnes of silver into India via the new IIBX platform, a government-approved exchange where duty on silver bullion coming through a trade deal with the United Arab Emirates runs to only 9% against the standard 15% duty on silver imports to India shipped from elsewhere.
With silver prices surging over the past 2 weeks, that inflow means "India's banks have [now] stopped silver imports" Reuters says.
As for gold's big jump to that 6-day run of new record highs ending at the start of this week, "This is one of the few rallies we've seen that hasn't been accompanied by a significant risk event or a new catalyst," says global bank and London bullion market-maker Standard Chartered's precious-metals analyst Suki Cooper.
"So this is different from the previous peaks we've seen."
Peaking at $2195 in spot trade this time last week, the gold price today held on track for a small weekly rise in terms of the UK Pound and the Euro, trading at £1698 and €1986 per Troy ounce respectively around Friday's 3pm London benchmarking auction.
The S&P500 index of US corporate equities meantime fell to 5125 in early New York trade today, down 50 points from Tuesday's new record close.
The Nasdaq 100 index of US-listed tech stocks fell 2.4% below its record close of two weeks ago, and so-called cryptocurrency Bitcoin lost 7.3% from yesterday morning's new record high above $73,600.
Base metal copper in contrast – sometimes called "the metal with a PhD in economics" because of its importance to industry and construction – held at 11-month highs after jumping this week's news of lower Chinese copper smelting capacity.
Crude oil also pushed up further, nearing 5-month highs on forecasts of stronger demand meeting tighter supply.
With the US central bank expected to make no change to its highest interest rates in 2 decades next Wednesday, the odds of the Fed then not cutting rates again in May or June today rose above 45% according to trader positioning tracked by derivatives exchange the CME's FedWatch tool.
That's the highest since October, when the price of gold sank towards its cheapest of 2023 and silver began to rally from 6-month lows.
New 'dot plot' forecasts are also due from the Fed next week, following its December prediction that 2024 would bring 3 rate cuts in total, a forecast now matched by the interest-rate futures market's consensus bet.

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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