Gold and silver futures extended their gains to kick off the trading week, buoyed by Federal Reserve policy expectations and solid investor and retail demand. While the precious metals bared their massive gains accrued in overnight trading, gold and silver remained up on the session.
June gold futures rose $13.40, or 0.55%, to $2,430.80 per ounce at 16:47 GMT on Monday on the COMEX division of the New York Mercantile Exchange. The yellow metal had been up as much as $2,454 before trimming these gains. Year-to-date, gold prices have rallied more than 17%.
Silver, the sister commodity to gold, firmed above $32 to start the trading week. July silver futures advanced $0.951, or 3.04%, to $32.21 per ounce. The white metal has been on a tear this year and has been one of the top-performing assets, with a 34% year-to-date increase.
Market watchers have provided a variety of different opinions on why gold and silver have been rising.
The main assessment is that the Federal Reserve is expected to cut interest rates in September, forcing traders to price in the reduction. Additionally, lower interest rates mean the opportunity cost of holding non-yielding bullion will be reduced.
US Treasury yields were up across the board on Monday, with the benchmark ten-year yield topping 4.45%.
The US Dollar Index (DXY), a gauge of the greenback against a basket of currencies, has not affected the metal commodities. The DXY rose 0.08% to 104.53, from an opening of 104.50. Typically, a stronger buck is bad for commodities priced in dollars because it makes it more expensive for foreign investors to purchase.
Others say that investors are keeping an eye on fiscal policy as the federal government runs recession- and war-time budget deficits. With interest payments the second-largest budgetary item, it is becoming harder for the US government to keep up with interest charges, forcing greater debt issuance.
Electrification is another issue as silver and copper are immense components to transmitting electricity and can play a big role in the shift to a green economy.
Copper has soared this year, topping $5 on a broad range of factors.
“Tighter global supplies, better world economic growth, smelter issues in China, as well as rampant market speculation, including a purported ‘short squeeze’ in Comex copper futures at present, are all driving the red industrial metal’s price higher,” wrote Jim Wyckoff, senior market analyst at Kitco.com, in market commentary this week.
Overall, the breakout in the metals market has been astounding to observe.
In other metal commodities, June copper futures advanced $0.027, or 0.53%, to $5.077 per pound. June platinum futures added $25.30, or 2.32%, to $1,064.70 an ounce. June palladium futures increased $19.20, or 1.9%, to $1,030.00 per ounce.