Precious metals see stiff prices, optimistic forecast amid safe-haven rush

There has been a lot of movement in currencies when it returned to safe-haven assets. The 10-year bond yield of the U.S. dropped lower than 2.8 percent, the first time it hit such level since April. The U.S. dollar and the Japanese Yen also had a one percent decrease due to the demand for the latter. However, it was a different story for gold.

The Economic Times reported on May 31 that the said metal’s price slightly increased but stayed near the $1,300 per ounce mark, where it previously ended up. According to ABC Bullion chief economist Jordan Eliseo, the improving strength of the U.S. dollar and the changes in the bullish trading positions within the gold market contributed to the price movement.

Eliseo stated, “You’d typically expect to see a move toward safe-haven assets support the yellow metal, especially when equities take a hit, but it’s not playing out that way this time.”

He also said that worries surrounding the euro that just emerged once again and the recent performance of the U.S. dollar is gaining momentum in the market. In effect, they have affected the movement of gold prices.

Then, in the morning of June 1, gold prices still remained near the $1,300 per ounce level and settled at $1,296.10 following the release of the U.S. jobs data. The data inspired confidence to those observing the market concerning the Federal Reserve proceeding to its plans of increasing rates. Per INN, the precious metal surpassed the said level in the earlier parts of the previous week.

On the same day, silver declined and arrived at $16.44 per ounce. Its peak throughout last week was at $16.55 from May 31. This news arrived after the news on the U.S. jobs data as well.

An article cited that the unemployment rate in the United States fell to 3.8 percent, its lowest mark in 18 years. (Source)

Regarding the jobs data, INN cited a Reuters article and detailed that according to government data, jobs in the U.S. last May gained 223,000 more. It also indicated that the average hourly earnings also increased 0.3 percent and that the country’s unemployment rate fell to 3.8 percent, its lowest mark in 18 years.

RBC Capital Markets chief U.S. economist Tom Porcelli said to Reuters, “It’s a good report all around. It literally checks off all the right boxes. The Fed didn’t need a report nearly this strong for them to have continued on course, a report like this is sort of icing on the cake.”

In a report from Kitco News last May 31, Bart Melek, the head of commodity strategy at TD Securities, said that in the late parts of 2018, platinum, silver and gold “should be well supported and follow a smoother upwards path.”

Melek also noted that the market for precious metals will remain volatile throughout the year with the three remaining Federal Reserve rate increase this year considered as a factor in the said volatility. He also forecasted that gold price will increase and reach the $1,400 level, while silver will rise to $19. On the other hand, the prices for platinum group metals will arrive at more than $1,150 by 2019’s end.

According to Melek, “The reasons for this optimism is predicated on our view that real and nominal interest rates will not rise to restrictive levels, industrial and physical demand should improve along with a robust global economy, while a weaker USD and sliding mining supply should also help.”