Precious metals news

For 446 days, the bond market's yield curve inversion, often seen as a recession predictor, has not resulted in an economic downturn. Historically, a normal yield curve shows higher long-term rates compared to short-term ones, indicating economic optimism. However, since July 5, 2022, the 2-year Treasury yield has consistently exceeded the 10-year rate, primarily due to aggressive Federal Reserve rate hikes aimed at curbing inflation. This condition matches the length of a similar inversion from 1978 to 1980 but has yet to lead to the anticipated recession.

Emerging nations are facing a severe financial dilemma as they contend with record-high external debt service costs of $400 billion this year. A recent report by the Debt Relief for Green and Inclusive Recovery Project (DRGR) highlights that 47 developing countries risk insolvency if they pursue necessary investments in climate adaptation and sustainable development to meet the 2030 Agenda and Paris Agreement objectives. This risk arises as these investments would push them beyond the external debt insolvency thresholds set by the International Monetary Fund (IMF), particularly over the next five years.

Currency market volatility is on the rise, driven by increased geopolitical tensions in the Middle East and heightened inflation in the US. The recent attack by Iran on Israel and strong US inflation figures have led traders to speculate that the US dollar will strengthen, anticipating that the Federal Reserve might maintain stringent monetary policies longer than previously expected. This shift marks a significant change from just a month ago, when volatility was at multi-year lows, prompting speculation about a new era of stability in the $7.5 trillion-a-day foreign exchange market.

In March, China's gold market witnessed diverse trends: official reserves increased, while wholesale demand slightly decreased. The Shanghai Gold Benchmark PM price surged by 10%, significantly outperforming other local asset classes. Although there was a mild drop in gold leaving the Shanghai Gold Exchange due to high prices, the first quarter saw the highest wholesale gold demand since 2019. The premium on China’s gold prices declined in March, indicating softer local demand; however, the quarter overall experienced the highest Q1 premium on record, driven by strong physical demand in earlier months.

Dive into an epic financial adventure as we traverse through decades of silver pricing history, exploring striking chart patterns and bold predictions

The outlook for gold prices remains broadly positive, yet caution is warranted. Currently, gold is exhibiting an unusual correlation with the US dollar and both 5-year and 10-year US real yields—a relationship typically transient and lasting only about 3 to 6 months. Should gold prices align once more with central bank movements, stability against the US dollar and a modest rise against the euro are expected, reflecting divergent Federal Reserve and European Central Bank policies. Despite these trends, the current supply of physical gold is adequate, and central bank purchasing levels do not fully support the high market prices. Consequently, the forecast for gold remains pegged at $2,000 per ounce by year-end.

Deutsche Bank has increased its gold price forecast to $2,600 by the end of 2024. This follows a similar bullish adjustment by Goldman Sachs, who now expects gold to reach $2,700 per ounce. Both banks attribute their optimistic forecasts to substantial investment inflows and rising geopolitical tensions, particularly citing the Middle East conflict as reinforcing gold's appeal as a safe haven. The recent failed missile attack by Iran on Israel further boosts this sentiment. Deutsche Bank also notes that while some early investors might take profits, new investors are likely to enter the market, sustaining demand and supporting higher prices. This sentiment has contributed to a 20% increase in gold prices over the past two months, with expectations for continued upward movement.

Federal Reserve Chair Jerome Powell has moderated expectations for interest rate cuts, citing persistently firm inflation figures in the first quarter that have introduced uncertainty about the Fed's ability to lower rates without economic deceleration. Powell highlighted a notable shift in the Fed’s stance after inflation readings consistently exceeded forecasts for three consecutive months, undermining earlier hopes for pre-emptive rate reductions. Despite previous optimism that a few more months of data could reaffirm their inflation targets, recent trends suggest a longer-than-anticipated timeframe to gain this confidence.

Gold prices experienced a slight decline on Tuesday, falling 0.3% to $2,375.50 per ounce as a result of high U.S. Treasury yields and profit-taking by investors. The dip follows a significant rally that brought gold to a record high of $2,431.29 last Friday. The increase in yields, particularly the 10-year Treasury note reaching 4.63%, reflects a market reaction to stronger-than-expected U.S. retail sales in March. This economic indicator has led to a decrease in expectations for rate cuts in 2024. Despite the current pause, gold has risen 15% this year, buoyed by prolonged inflation expectations, heightened safe-haven demand due to ongoing Middle East tensions, and substantial buying by central banks.

Gold prices have surged to near-record highs, bolstered by increased safe-haven demand amidst escalating tensions in the Middle East. Following Iran's attack on Israel, involving over 300 drones and missiles, the demand for gold has intensified, with the June futures contract closing at a record $2,383 per ounce. Analysts, including those from Citi, predict that gold could potentially reach $3,000 if the geopolitical situation worsens, leading to further market instability. Market analyst Bartosz Sawicki anticipates that any significant retaliation by Israel could not only escalate the conflict but also drive further increases in gold prices, alongside rises in oil prices and the U.S. dollar.

In Antarctica, American geologists made an incredible find: an active volcano that's expelling particles of gold. This phenomenon occurs as hot gases from the volcano carry gold from deep within the volcanic rock to the surface and even beyond, with particles found as far as 1,000km away. The volcano, standing at a height of 3,794 meters, continues to be active, periodically releasing these valuable particles into the atmosphere, as reported by New Scientist and IFL Science.

The U.S. dollar is experiencing its strongest rally in over a year, propelled by expectations that the Federal Reserve will maintain high interest rates longer than anticipated and by increasing demand for the dollar as a safe haven due to rising tensions in the Middle East. The Bloomberg Dollar Spot Index has risen for five consecutive days, marking a nearly 2% increase—its most significant since February 2023. This surge is further intensified by China's decision to lower the yuan's reference rate, which has put additional pressure on emerging market currencies. Adjustments in market expectations now suggest that the Fed might delay easing interest rates until September, a shift from the previously expected July, following a series of unexpectedly high U.S. inflation reports that have heightened market volatility.

Since Nayib Bukele became president of El Salvador, El Salvador has been in American media and global political discussion more than ever. While much of the attention focuses on Bukele’s mass incarceration of gang members and a decline in homicide of over 70%, Bukele has also drawn attention to his favoritism towards Bitcoin and how he has pushed El Salvador to embrace cryptocurrency.

UBS Group AG strategists suggest there is a growing risk that the Federal Reserve may increase interest rates to as high as 6.5% next year, due to persistent strong U.S. economic growth and sticky inflation. Initially predicting two rate cuts this year, UBS now considers a scenario where inflation does not meet the Fed's target, potentially leading to resumed rate hikes. This shift could trigger a significant selloff in both the bond and stock markets. Recent U.S. data indicating economic resilience has led markets to adjust expectations, reducing bets on policy easing and preparing for the possibility of increased rates if inflation remains above 2.5%.

In March, U.S. retail sales rose by 0.7%, surpassing expectations of a 0.3% increase despite concurrent rising inflation, according to the Commerce Department. This growth, although slower than February's revised 0.9% rise, indicates that consumer spending remained robust. The consumer price index, as reported by the Labor Department, climbed 0.4% for the month, aligning with an annual inflation rate of 3.5%. However, the 4% annual increase in retail sales demonstrates that consumer spending outpaced inflation, suggesting a resilient economic demand amidst escalating prices.

As tensions escalate in the Middle East following Iran's extensive drone and missile attacks on Israel, gold prices are approaching new record highs due to increased safe-haven demand. On Monday, gold prices rose by 1.7%, nearing last week’s record of over $2,400 per ounce, though the price later settled lower as investors adjusted their positions amidst overheated rally indicators. The ongoing geopolitical uncertainties in the Middle East and Ukraine further enhance gold's appeal as a safe investment during times of crisis. Chris Weston of Pepperstone Group emphasizes that the geopolitical tensions alone are a compelling reason to invest in gold, anticipating a continued upward trajectory in its price.

In October 2022, astronomers using the Gemini South telescope in Chile observed the brightest cosmic flash ever recorded, dubbed the "Brightest Of All Time" or the BOAT. Further analysis by the Webb Space Telescope identified the BOAT as a supernova, a massive star's explosive demise. This research, published in Nature Astronomy, sought to find traces of heavy elements like gold and platinum typically thought to be produced by such cosmic events. However, none were detected, deepening the mystery of how these precious metals originate. The study suggests that while some heavy elements come from neutron star mergers, this process alone cannot account for their abundance in the universe, as these mergers are infrequent and occur over vast time scales.

Amid gold's remarkable rally, with prices surpassing $2,400 an ounce, Brooklyn's King Gold & Pawn has been inundated with customers eager to sell their gold. The motivations vary: some are capitalizing on the high prices, while others, pressed by financial needs, are selling to afford essentials like rent and groceries. Gene Furman, the shop owner, notes an unprecedented tripling in transactions since late February, as individuals treat their gold assets as an emergency fund. Branden Sabino, an IT specialist, exemplifies this trend, selling his gold jewelry to manage rising living costs without any savings to fall back on.

Peter’s back in Puerto Rico this week for his podcast after another week of record gold prices. In this episode, he discusses media coverage of inflation, this week’s CPI report, and Bitcoin’s weakening price relative to gold.

Crude oil prices experienced a modest decline in reaction to the recent Iranian attack on Israel. West Texas Intermediate (WTI) crude for May delivery fell by 1%, closing at $84.83 per barrel, while Brent crude, the global benchmark, dropped 1.2% to $89.41 per barrel after briefly exceeding $90. Prices for May gasoline and heating oil also saw reductions of 1.2% and 1.6%, respectively. Natural gas prices decreased by 2.4%. The market's subdued response reflects investors' expectations that the attack, which was largely neutralized by Israel's defenses, would not escalate into a broader regional conflict.