The gold buying frenzy continues, with Central Banks continuing to add to their stockpiles month over month. With the recent climb in gold, I would assume that smaller market participants have also taken part in this market and will continue to do so.
Since our last update gold has traded up to new all-time highs at around $3,508. It seems like just yesterday that we were looking for support at the $3,300 to hold. We stated in our last update that should the market hold there it would be a grind, which it has. Now the gold market has had a small pull back and settled at around the $3,480 level. I would assume that a pull back to the $3,450 level before a test again of the $3,500 level is in the cards.
On the silver side of things, it has also been trading up, touching just below $41/oz which has not been seen since 2011 (14 years ago.) Silver will continue to be guided by its bigger brother Gold, and you can expect it to mirror it. Should gold go up, so will silver, should gold drop, so will silver. The recent climb up in silver reminded me of my start in the industry, it was at around $40-$41/oz that I remember running out of inventory and having nothing to sell. The market is a little more balanced now and this is not the first time seeing $40/oz, but if the rise in silver continues, I can definitely see a potential squeeze on inventory being possible.
The market is trading up with the thought that The Fed will cut rates later this month. The CMEs FedWatch tool has the probability of a 25-basis point cut at 90% as of this morning. As rates go lower, it make gold more appealing as it is a noninterest bearing asset. There are still other geopolitical risks ongoing, like the war between Russia and Ukraine, the conflicts going on in the Middle East. Truth be told, gold paying interest or not, with the global outlook, gold as part of a balance portfolio is a great insurance policy.