Source: Gelonghui
Then play music, then dance.
Who are the top performing commodities this year?
Gold is certainly a “bright boy,” but there is something more powerful than gold — silver.
On Friday, driven by spillover sentiment in the metals market, COMEX gold futures closed up 1.44% to $2419.8 per ounce; COMEX silver futures closed up 6.36%, breaking through $30 an ounce to $31.775 per ounce, a new 11-year high since February 2013.
Since the beginning of the year, silver has surpassed gold by more than 30%, making it one of the best-performing major commodities this year.
On Friday, gold futures, and spot, and LME copper were also close to record highs.
COMEX gold rose 1.44% to $2419.8 per ounce, while London gold now reported $2414.500 per ounce, up 1.61%.
In addition, under the epic pressure of New York copper, LME copper also recorded an increase of nearly 2.8%, approaching its all-time high in March 2022.
Currently, despite rising dollars and yields, the price of gold is still rising.
Market analysts believe that behind the collective “carnival” of the metals market is high inflation, large-scale debt issuance, and uncontrolled US banknote printing, driving market participants to switch to precious metals and other commodities.
Sean Lusk, co-head of commercial hedging at Walsh Trading, told Kitco News that he couldn't imagine a better situation where gold prices were higher.
“It's the perfect storm for a bull market.”
Furthermore, as US inflation cooled more than expected in April, the market's renewed hope that the Fed would cut interest rates was also a major driving factor.
According to the data, the US consumer price index (CPI) rose 3.4% year on year in April, up 0.3% from March. Excluding highly volatile factors such as food and energy, core CPI rose 3.6% year on year in April, the smallest increase since April 2021.
Bart Melek, head of commodity strategy at TD Securities, said that at the end of the day, gold is responding to the idea that US inflation may be under control... any talk about long-term high interest rates will be mitigated.
Traders expect that the Federal Reserve may cut interest rates as early as September this year. Currently, the probability is 49%. Interest rates may be cut twice during the year.
What needs to be wary of, however, is that recently Federal Reserve officials have continued to “throw cold water” on interest rate cuts. They have warned that interest rates should remain high for a longer period of time.
Last night, Federal Reserve Governor Bowman even said he is willing to raise interest rates if inflation stagnates or the trend reverses.
So, will the popularity of precious metals such as gold and silver continue? The bullish momentum in the market is very strong.
According to the World Bank, the price of gold will increase by 8% year on year in 2024.
In the face of heightened geopolitical uncertainty, stronger demand for gold in emerging markets and developing economies (EMDes) is a key risk to rising gold prices. Conversely, sluggish industrial activity in major economies could weaken demand for silver and platinum, thereby depressing prices.
As a safe-haven asset, the price of gold has soared this year. Furthermore, record central bank purchases, led by Japan, China, etc., boosted demand for gold in the first quarter of 2024.
On the silver side, World Bank analysts pointed out that after silver prices were stable and less intense in the first quarter, silver prices surged 12% in April compared to the previous month.
This is mainly due to the recovery in industrial activity and some factors affecting the price of gold, which brought the price of gold and silver closer to the 10-year average. Silver prices are expected to rise 7% in 2024 and another 4% in 2025.
In fact, the two precious metals, gold and silver, fluctuate to a large extent simultaneously because they both have similar macro and currency hedging characteristics.
As central banks set records for gold purchases, retail interest in China and bets that the US would cut interest rates resurfaced, and silver also rose.
Although silver's current gains have surpassed that of gold, it is still relatively cheap.
Daniel Ghali, senior commodity strategist at TD Securities, said that precious metals breaking above the $30 level could trigger significant buying activity from exchange-traded funds, thereby increasing the risk of silver contraction.
FxPro senior market analyst Alex Kuptsikevich said that silver doesn't look overheated. He believes that the immediate target for silver is $33 per ounce; furthermore, silver may rise sharply to an all-time high of $50.
Mind Money CEO Julia Khandoshko said that this trend in silver reflects the broader bullish momentum in the commodities market.
“Today, the prices of all metals, including silver, are rising for a simple reason — being cautious about global economic growth. ”
“If we look at commodity charts, we see that they have a cyclical price trend: when the economy is sluggish, they are cheap; when the economy recovers, their prices rise.”
editor/tolk