After a stellar week of gains, gold remains at the record closing levels seen over the weekend and into this week. After increasing by more than $100 per ounce in a week, gold has stabilised above $2,100, and could push further into uncharted territory in the coming months.
After several months of consolidation above $2,000 per ounce, gold finally found a spark last week that saw the metal not only rise but push considerably higher in a short space of time. The latest rally looks healthier than the short-lived spike of December in 2023. That rally lasted little more than an hour or two, and gold soon tumbled back down as the momentum fizzled out. This week’s gains, although still impressive in a relatively short period of time, have been much steadier and the metal is holding onto the new price levels.
Last week saw PCE US inflation come in at 2.4% annually. This is the Federal Reserve’s favoured measure of inflation, and at 2.4% it is heading ever closer to their target of 2%. Other economic data from the US also suggests that the economy may finally be cooling after the prolonged period of higher rates. It’s far from enough to prompt an immediate cut from the Fed, but markets are now confident that June will see the first rate cut.
As a result, the US dollar has fallen back, with investors turning to other assets including precious metals, and prompting this latest surge in prices. Gold closed at a record price Monday and Tuesday night and could do so again tonight based on current prices. Gold is sitting at $2,140 per ounce at the time of writing which would represent yet another record close should it maintain that level throughout the day.
Gold has also broken records in other currencies as well of course. In Sterling gold is currently trading at £1,680 per ounce, which will also be a record close. £1,700 per ounce is firmly on the minds of UK investors and could be hit this week if gold makes any further pushes higher. In Euros gold is at €1,970 per ounce and could soon hit €2,000 if the trend continues this afternoon.
Silver as usual is also benefitting from gold’s rally as investors look for a cheaper alternative metal to invest in and further diversify their portfolio. Silver is hovering at $24 per ounce and is up an impressive 7% in the past week alone. For Sterling and Euros, the gains equate to £18.84 and €22 per ounce. Silver is far from hitting all-time highs of course but is looking like a good opportunity while gold sits so high. The gold-silver ratio hit 90 on Monday, which also suggests silver is undervalued compared to gold.
Last week’s financial data was only the start of things to come, it could be three months yet before the Fed actually cuts interest rates. It is also unclear how quickly and how low rates will even be cut this year, but markets are clearly ready to move their money even when cuts simply become more probable. Resistance along the way is almost guaranteed but $2,200 per ounce is more than possible if this week’s $100 gain can be repeated. As a result, we are seeing buying and selling ramp up as investors make the most of previous investments or buy-in before prices get even higher.
