Precious metals news

Goldman Sachs predicts record-high prices for copper and gold in 2024 due to increased demand from AI and defense sectors. The bank forecasts copper to reach $12,000 a ton and gold to hit $2,700 an ounce. This surge is driven by a "5D Bull Market" involving disinvestment, decarbonization, de-risking, data centers, and defense spending. Low investment in new production capacity and rising demand from AI, data centers, defense, and green transitions are tightening the market for critical metals.

The U.S. economy grew by 1.3% in the first quarter, the slowest pace in nearly two years, due to reduced consumer spending and a wider trade deficit. Revised figures showed consumer spending increased by 2%, lower than the previously reported 2.5%. Despite the sluggish start, forecasts suggest GDP growth could rebound to 3% or more in the second quarter. Inflation remained steady, with the personal-consumption-expenditures price index rising at a 3.3% rate.

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Lingering inflation pressures from the pandemic are prompting the Federal Reserve to maintain high interest rates, dampening hopes for cuts this year. Despite expectations that inflation will eventually cool, Fed officials are prepared to keep borrowing costs elevated to curb rising prices, balancing the risk of economic downturn against the need to control inflation.

U.S. firms have become more pessimistic about the economic outlook despite continued expansion from early April to mid-May, according to a Federal Reserve survey. Weakened consumer demand and modestly increasing inflation are key concerns, as the job market gradually cools. The Fed's Beige Book survey highlights varying conditions across industries and regions, influencing central bankers' decisions on maintaining current interest rates.

The record stock market gains are heavily reliant on a few large tech stocks, primarily driven by excitement around AI. Nvidia, Microsoft, Apple, and Alphabet alone added over $1.4 trillion in value this month, more than all other S&P 500 stocks combined. Nvidia, boosted by AI demand, accounted for half of this gain. While AI has spurred significant growth since the launch of ChatGPT in late 2022, concerns arise that the surge may resemble the unsustainable profit levels seen in the 2007 banking sector rather than a pure stock bubble.

Billions of dollars worth of gold is smuggled out of Africa each year, primarily to the UAE for processing, according to a SwissAid report. The Bern-based NGO analyzed gold import data over a decade, estimating the illicit trade at $23.7 to $35 billion annually. In 2022 alone, over 435 tons of gold were smuggled out, fueling conflicts and financing criminal and terrorist networks. The UAE has acknowledged the issue and reported a significant increase in suspicious activity reports related to the gold sector.

As I warned, U.S. Residential Electricity prices hit a new all-time high this year.  Unfortunately, this is just the beginning of much higher power bills for Americans as energy and capital costs continue to surge.  How much did Residential Electricity Rates increase...

Central bank gold buying has been a significant factor in the yellow metal’s spectacular run-up to new record highs. But with its recent small correction downward, it’s a good time to look at which central banks are selling — and why.

Money Supply is a very important indicator. It helps show how tight or loose current monetary conditions are regardless of what the Fed is doing with interest rates. Even if the Fed is tight, if Money Supply is increasing, it has an inflationary effect.

ConocoPhillips has agreed to acquire Marathon Oil for $22.5 billion, continuing a trend of major mergers in the oil and gas sector aimed at strengthening reserves. This follows a highly active year in the industry, with $250 billion in mergers and acquisitions in 2023, driven by a booming stock market and record U.S. oil production.

UBS has raised its silver price forecasts, projecting the metal to reach $34 per ounce by the end of September, $36 by the end of 2024, and $38 by June 2025, driven by strong industrial demand and potential undersupply. Despite a recent price pullback, UBS anticipates continued silver outperformance, with industrial demand, particularly from the photovoltaic sector, rising significantly. Supply challenges, including mine shutdowns in Peru, are expected to contribute to a market shortfall, supporting higher prices.

UBS predicts a rally in commodities based on strong fundamentals. They raised their gold demand forecast due to record central bank purchases and sustained Chinese buying, expecting prices to reach USD 2,600/oz by year-end. Copper is also expected to see price gains, driven by supply challenges and China's housing policies, with prices forecasted to hit USD 11,500/mt by year-end. UBS projects a 10% return for broad commodity indexes over the next 6-12 months and recommends an active investment approach in commodities like oil.

The U.S. economy's unexpected resilience, driven by a strong job market and consumer spending, has raised concerns that the Federal Reserve may delay or cancel planned rate cuts to combat persistent inflation. Minutes from the Fed's May meeting indicate a readiness to tighten policy if inflation risks persist. As the Fed prepares to release updated growth and inflation forecasts, market expectations for rate cuts are diminishing, influenced by robust economic performance and the upcoming presidential election.

Gold prices have surged due to strong demand from Asia, with futures rising from $2,052 to $2,360 over three months. Julius Baer attributes this increase not to overall demand growth, but to regional shifts and a greater willingness to pay, especially in China. The Chinese central bank has significantly contributed to this demand, driven by economic and geopolitical motives, including reducing reliance on the US dollar. Julius Baer also holds a positive outlook on silver.

Zimbabwe has shifted from extreme inflation to deflation with the introduction of its new currency, the ZiG (Zimbabwe Gold), which replaced the unstable Zimbabwean dollar. In May, consumer prices fell by 2.4% from the previous month, marking a significant change from the previous currency's volatility. This is Zimbabwe's sixth attempt in 15 years to establish a stable currency, following the Zimbabwean dollar's repeated crashes and 80% devaluation against the US dollar earlier this year.

The inverted yield curve, a reliable recession indicator where short-term Treasury yields exceed long-term ones, is showing signs of losing its predictive power. Despite being inverted for a record duration, no major economic slowdown has occurred. U.S. employment remains strong, and economic growth is expected to improve. If a recession doesn't happen soon, the yield curve's credibility as a recession predictor could be damaged, highlighting how the Covid-19 pandemic has disrupted traditional market assumptions.

The Nasdaq closed above 17,000 for the first time on Tuesday, driven by Nvidia's 7% surge and gains in semiconductor stocks. The S&P 500 saw slight gains, while the Dow dropped as rising Treasury yields impacted the market. The tech sector led gains, while healthcare and industrials declined. Afternoon trading saw stocks lose ground due to weak debt auctions pushing Treasury yields to multi-week highs, raising concerns about economic impact and the Federal Reserve's plans.

A survey by the Federal Reserve Bank of New York reveals that Americans increasingly expect more federal student debt forgiveness, with the perceived likelihood rising to 39% in April from 28.7% in December. Expectations are particularly high among older Americans. Despite some debt relief measures under President Biden, including partial forgiveness for over 10% of borrowers, student loan repayments resumed last fall after a pandemic pause. Many borrowers are struggling, with one in six behind on payments. Rising interest rates on new student loans are likely to increase pressure on the Biden administration for further relief.

Gold prices fell on Wednesday as U.S. Treasury yields increased and investors awaited a key inflation report expected to influence the Federal Reserve's policy decisions. Spot gold dropped 0.82% to $2,341.53 per ounce, while U.S. gold futures fell 0.6% to $2,342.30. Rising Treasury yields and a stronger dollar have made gold less appealing. The market's reduced expectations for Fed rate cuts have also impacted gold prices. The upcoming U.S. core personal consumption expenditures (PCE) data could further affect gold if it signals prolonged higher interest rates.