Everything You Need to Know About the Surging Metal Prices

Analysts Notebook joined discussion · May 20, 2024 19:25

Friday was an exhilarating day for the metals market, as gold futures reached their highest settlements on record, and silver prices achieved their highest close since 2013.

Gold, silver and copper are all experiencing notable gains from economic uncertainty boosting demand for safe-haven assets, supply-chain disruptions impacting availability, and increased industrial demand, particularly for green technologies," said Adam Koos, president at Libertas Wealth Management Group. "Despite differing specifics for each metal, the overarching theme here is a reaction to global economic and market conditions."

Everything You Need to Know About the Surging Metal Prices

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Factors Powering the Metals Markets

• Recent Weakness in the U.S. Dollar

Dollar-denominated metals prices — gold and silver in particular — have found more recent support from weakness in the U.S. dollar, analysts have said. David Miller, chief investment officer and senior portfolio manager at Catalyst Funds, stated that the federal government's $1.5 trillion deficit is weakening the U.S. dollar and comparatively strengthening precious metals.

• Safe-Haven Assets

The common factor in the gains for gold, silver and the dollar is a 'safe haven' aspect," said Lundin. "In my view, this is an indication that global investors view current inflation rates, debt loads and interest rates as mutually incompatible."

• Tight Supplies

Copper, unlike gold and silver, is not considered a precious metal but has seen a price increase due to expectations of growing demand. Factors such as tighter global supplies, improved world economic growth, smelter issues in China, and market speculation, including a potential 'short squeeze' in Comex copper futures, are contributing to this rise, according to Jim Wyckoff of Kitco.com.

Joe Maher from Capital Economics noted that the strong demand for copper, driven by its use in electric vehicles and renewable energy projects, along with potential supply shortages, justify the high prices.

• China Looks to Buy More Precious Metals

Bloomberg Intelligence Senior Commodities Strategist Mike McGlone shared insights on metals and future market trends on Market Domination Overtime. McGlone discussed the potential impact of China's interest in buying precious metals, noting that while China has been a major buyer of gold, there are rumors of silver hoarding as well. He expressed concern that silver might follow copper's volatile pattern of spiking and then dropping. However, McGlone remains generally positive about commodities, especially metals, compared to other commodity types.