Gold (GLD) prices per ounce traded down to around the $5,100 level before snapping back. Silver (SLV) also followed. But that pause turned out to be temporary. Gold traded at around $5,550 yesterday evening.
When might this metal rush end?
Catalysts
Gold spiked in after-hours trade when the Federal Reserve kept its benchmark rate at 3.5% to 3.75%. Asian stock markets increased slightly. Japan’s Nikkei added 0.18%, but Hong Kong started trading slightly lower. MSCI warned Indonesia might face a downgrade. That sent the country’s Jakarta Composite down by over 8%.
The rising volatility in Asian markets contrasts with the U.S. markets in a holding pattern. However, the divergence would only increase the attractiveness of metals, especially gold and silver. Central banks are buying more gold. Demand for silver and copper is firm amid tight demand. That suggests that any price weakness would prove temporary.
Investors should expect stocks like Barrick Gold (B), Teck Resources (TECK), AngloGold (AU), and Kinross Gold (KGC) to trade at fresh new highs.
The weak US dollar (UUP) is also a bullish catalyst for the metals. The USD index bullish fund touched around $26.40 this week but closed at $26.63 on January 28. Unfortunately, the USD weakness shows no signs of recovering. The contradictory trade policies, rising tensions against South Korea, and Greenland are only some of the reasons hurting the currency. That helps lift gold prices.
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