Gold futures settled the Thursday trading session above $1,900 as the yellow metal logged its best annual performance since 2010. Silver, the sister commodity to gold, also recorded its best yearly gain in a decade. Can precious metals repeat this performance in 2021?
February gold futures rose $8.20, or 0.43%, to $1,901.60 per ounce on the COMEX division of the New York Mercantile Exchange. Gold posted a weekly boost of 1%, bringing its 2020 rally to above 25%.
Silver prices closed the year in the red, but that did not stop the white metal from posting a massive bump in 2020. March silver futures slipped $0.048, or 0.18%, to $26.525 an ounce. Silver posted a weekly spike of 2.24%, elevating its gain in 2020 to just under 49%.
So, how did gold and silver log their most significant annual performance in a decade? Indeed, there was a myriad of factors that contributed to the rise in the metals market.
The primary element had been the coronavirus pandemic that decimated global financial markets and triggered a wave of inflation concerns as governments and central banks unleashed trillions in fiscal and monetary stimulus relief. A plunging greenback was another critical component of gold and silver’s surge.
On Thursday, the US Dollar Index (DXY), which gauges the greenback against a basket of currencies, slipped below 90.00. A weaker buck is good for commodities priced in dollars because it makes it cheaper for foreign investors to purchase.
In 2020, the index cratered more than 7%, despite rallying as much as 8% at the height of the COVID-19 public health crisis. This was the greenback’s first annual drop since 2017. As investors renewed their risk appetites, they returned to the financial markets and placed their bets on speculative assets.
Commodity markets kept an eye on the latest employment data. According to the Bureau of Labor Statistics (BLS), initial jobless claims came in at 787,000 in the week ending December 26. This is down from the previous week’s 806,000, and it was lower than the market forecast of 833,000.
Continuing jobless claims hit 5.219 million, while the four-week average topped 836,000.
Another 308,262 applications for benefits submitted through a temporary federal-relief program lifted the total number of Americans filing for unemployment benefits to 1.15 million. This means that jobless claims have yet to fall below one million since the pandemic started.
The US bond market was in the red to close out 2020. The benchmark 10-year Treasury fell 0.01% to 0.916%. The one-year note was flat at 0.112%, while the 30-year bond slumped 0.016%, to 1.646%.
In other metal commodities, February copper futures dropped $0.029, or 0.82%, to $3.52 a pound. February platinum futures edged up $1.00, or 0.09%, to $1,079.50 an ounce. February palladium futures surged $77.10, or 3.24%, to $2,455.50 per ounce.