Gold is once again at the epicenter of global market news with its $4,650-per-ounce level in the lead as the precious metal is once more recovering from a six-month losing streak. The rise in precious metals is also reflected in silver also rising strongly in August.
Spot gold was at $4,641 per ounce on Monday, August 24, after climbing to more than three-month high. U.S. gold futures were also at $4,700 per ounce.
Gold is now approaching $4,650 - the level traders and market observers have been looking for. This is a remarkable recovery from earlier in the summer and strong investors’ appetite for precious metals is on the rise.
Gold’s August performance has been particularly impressive. Based on figures in the market update and estimates in the market update that the metal has risen by 15% and has added more than $4.3 trillion in value to the market. Silver is even stronger, growing by 19% and adding $620 billion in market value.
Combined, the two major precious metals have added more than $5 trillion in market value so far in the month, according to the market update.
The rally has been supported by several macroeconomic factors. Reuters reported that gold’s latest advance had been enabled by a weaker U.S. dollar and investor hope that there were ahead-of-time economic news and signals from the Federal Reserve. U.S. interest rate policy expectations are still a factor that drives bullion prices as lower yields can make non-yielding assets such as gold more attractive.
A concern about the US fiscal outlook has also added to gold's appeal. Treasury yields, government borrowing and Treasury buybacks have also been at the heart of market interest as well and worries about fiscal credibility have fueled demand for traditional stores of value.
Silver is also strongly involved in the precious metals rally. Most recent market data placed silver around $69-per-ounce and shows how quickly the metal recovered from its weak period.
In particular silver is of particular importance as investment and industrial demand are a positive factor. And because of its use in electronics, solar technology and other industrial activities its price is subject to financial market sentiment as well as expectations for economic activity.
For gold, the price above $4,650 is closely watched by traders as the psychological level. A sustained rise above this level will keep the focus on the metal’s highs and possible resistance levels, while failure to stay there could lead to profit-taking after the fast August advance.
Even with the bullish momentum, precious metals are still very sensitive to the dollar, bond yields, inflation expectations and Fed policy. So even at a high level of interest rate, investors should expect some volatility.
The recent rally also underscores how in commodity markets, the mood can change very quickly. Gold fell toward around $4,000 in mid-July and then roared back to $4,600 by late August.
As gold approaches $4,650 and silver remains near $69, and with gold back in the $4,650 to $4,650 range and silver around $69, metals will remain in focus as markets are looking to see more data from U.S. economic data and Federal Reserve officials for the near future.
At least for now, the August rally has turned gold and silver into two of the best-known stories in global commodities. The precious-metals surge, which is projected to add a combined $5 trillion in value to the market for the month, is at the forefront of investors’ minds all over the world.
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