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Gold futures rallied again to close Friday at a new all-time high while silver culminated a four-day 10% surge to finish at its best settlement since February 2013.
Many analysts have attributed the YTD gains in precious metals to expectations for interest rate cuts by the Federal Reserve later this year.
“Precious metals are non-interest bearing assets so expectations of lower interest rates lend support to both gold and silver prices,” Chris Gaffney, president of World Markets at EverBank, tells Marketwatch.
Gaffney says upside for both gold and silver would be “limited” if the Fed decides on only one rate cut or no rate cuts this year, with silver likely outperforming gold since it is an “industrial precious metal” and typically performs better than gold in times of global economic strength.
Gold would outperform silver, Gaffney says, if there’s any “uptick in geopolitical concerns” with an expansion of the Gaza conflict, or a new conflict with China, a global economic slowdown, or aggressive interest rate reductions.
Front-month Comex gold (XAUUSD:CUR) for May delivery ended this week +1.9%, including a 1.3% rise on Friday, to $2,412.20/oz, and front-month May Comex silver (XAGUSD:CUR) settled +9.8% on the week, up 4.6% on Friday.
Meanwhile, Comex copper futures (HG1:COM) also marked a fresh all-time settlement high, with the July contract closing +7.7% this week, including a 3.4% gain on Friday, to $5.05/lb, the first time U.S. copper futures have ever finished above the $5 mark.
ETFs: (NYSEARCA:GLD), (NYSEARCA:GDX), (GDXJ), (IAU), (NUGT), (PHYS), (GLDM), (AAAU), (SGOL), (BAR), (OUNZ), (SLV), (PSLV), (SIVR), (SIL), (SILJ), (CPER), (COPX), (OTC:JJCTF)
After “dramatically” underperforming the price of gold early this year, the YTD percentage gain of 14.3% in the NYSE Arca Gold Miners Index has nearly caught up with the 17% gain for gold futures this year.
Production costs climbed during the pandemic as costs rose, but as costs stabilize and if the price of gold stays at current levels or moves higher, mining companies will “generate significant amounts of free cash flow and the stocks will react very well,” Gabelli Gold Fund portfolio manager Chris Mancini tells Marketwatch.
Some of this week’s best stock performers were precious metals miners, including Platinum Group Metals (PLG) +36.2%, Novagold (NG) +22.9%, Endeavour Silver (EXK) +16.5%, Hecla Mining (HL) +14%, Sibanye Stillwater (SBSW) +12.9%, Fortuna Silver Mines (FSM) +12.1%, Coeur Mining (CDE) +11.1%, Silvercrest Metals (SILV) +10.8%, MAG Silver (MAG) +10.7%, Silvercorp Metals (SVM) +10.3%, McEwen Mining (MUX) +10.2%, Gold Royalty (GROY) +9.9%, SSR Mining (SSRM) +9.9%, Alamos Gold (AGI) +9.2%, First Majestic Silver (AG) +8.9%, Caledonia Mining (CMCL) +7.7%, Equinox Gold (EQX) +7.4%, DRDGold (DRD) +7.3%, Pan American Silver (PAAS) +6.8%, Harmony Gold (HMY) +6%.
