Monday Metal Markets Update (17 June 2024) – Gold and Silver Recover After Brief Morning Slip

 

Gold and Silver News – Gold and Silver Recover After Brief Morning Slip (17 June 2024)

Gold and silver prices started this morning down as the market continued to react to hawkish signals from the Federal Reserve. Despite favorable inflation readings leading up to the Fed’s June 12 meeting, the board opted to retain the previous target rate of 525-550. Even more troubling for bullion bulls betting on easing interest rates was Fed Chair Jerome Powell’s comments announcing the Federal Reserve’s decision to keep interest rates unchanged for June. While investors were told last year to expect three potential rate cuts in 2024, Powell is now signaling that only one rate cut may be on the docket for the rest of the year.

 The markets shifted midday, and a quick price swing in both markets drove gold (+$3.18) and silver (+$.10) into the green. 

Metal markets dipped considerably immediately following the Fed’s decision to retain its high interest rates heading into Q3 of 2024. Speculation concerning interest rate cuts has played a major role in price-action for both gold and silver this year. It appears this morning that the markets are not yet done reacting to the Federal Reserve’s hawkish signaling, which delivered a hard blow to interest rate speculation – and bullish sentiment – in the precious metal markets. Gold and silver have generally moved in tandem, and the gold-silver ratio remains relatively unchanged and hovers around 78.5:1. 

Platinum (+$3.36) also logged gains on the day, climbing just over $14 before losing most of its gain toward the end of the trading day. is still too soon for platinum bulls to declare victory – the metal is still down considerably on both the month and the year. 

Gold Price News and Analysis – 17 June 2024

Gold prices started the day down over $13 on the day as the market continued to react to diminishing prospects for multiple Federal Reserve rate cuts in 2024. Federal Reserve watchdog CME Group anticipates an 8.3% chance of reduced rates in July. Their projection grows to 63.3% as we head into the September Federal Reserve meeting, signaling that a rate cut may come sooner rather than later. This would be great news for gold bulls, who hope to keep the metal’s price above the key $2,300 psychological support line for long enough to capitalize on interest rate speculation leading up to the Fed’s July 31 meeting. 

As of 5:30:00 CST, gold has recovered and is slated to end June 17 in the green. A rather large midday swing closed off what has been a volatile day for the precious metal. As of writing, gold is up $3.24 on the day, giving a brief moment of relief to gold bulls who are hoping to push the metal back to its recent high-points. 

Gold price bulls have a tough road ahead of them, though. Quashed interest rate cut hopes are not the only factor that helped drive gold deep into the red last week. China’s central bank stopped buying gold at the beginning of the month, signaling the first break in their massive gold buying project in a year and a half. Both in 2023 and in the first half of 2024, China’s central bank, the People’s Bank of China (PBoC) logged record numbers to retain its title as the biggest buyer of gold in the world. 

China’s central bank gold buying has played an undeniable role in the metal’s record-breaking 2024 run. For gold bulls, the country’s contribution to gold’s scarcity and value is already sorely missed. It is impossible to say why China stopped buying gold last month, but the metal’s extreme price could have something to do with it. If gold prices settle, China may resume its gold-buying efforts and breathe new life back into the gold market. 

For now, gold investors eye two central banks to inform their bets – but for two entirely different reasons. 

Good news on inflation and interest rate cuts from the Fed would have an immediate impact on gold prices, likely sending the metal far closer to its recent peaks as investors react. Likewise, a resumed gold-buying program from the People’s Bank of China should have a near-instant effect on gold prices. We should have a better idea of whether or not China is jumping back into the gold market at the end of June. 

Silver Market News and Price Forecast – 17 June 2024

Gold made international headlines for its record-breaking bull run, but silver has actually outperformed the yellow metal to date this year. Despite logging a price increase of over 20% since the beginning of 2024, silver dropped in line with gold after last week’s hawkish Federal Reserve call. Complicating the equation for silver bears is the metal’s solid supply-demand dynamics. Experts say that silver’s price might not yet reflect the extreme supply deficit predicted for 2024. 

With record-breaking demand in the Asian solar market sector, silver’s supply and demand fundamentals remain solid and might keep the metal’s price steadier than gold’s as the market continues to grapple with the recent Fed ruling. A high (78.46:1) gold-silver ratio may mean that the metal has quite a bit of room to move in the next few months. 

Some analysts have already suggested that gold is overvalued. Silver, on the other hand, offers strong fundamentals and an impressive set of use-cases in industry that could keep the metal moving forward in the next few weeks. 

Dow Jones interviewed Katy Kaminski, a senior analyst at AlphaSimplex. She had this to say about silver’s prospects heading into Q3 of 2024:

Given the “high level uncertainty with high valuation in equity markets, the threat of inflation and the need for value storage and diversification, gold is more positively positioned than silver as a safe-haven asset,” she said. Silver is also more widely used in industrial production, and with production and manufacturing having somewhat decreased, especially in China, it’s “not surprising that silver is lagging gold.”

Silver started the day in the negative. Much like gold, a substantial midday swing brought the precious metal into the green (+$.11). 

Today was a good start for gold and silver bulls hoping for stability heading into the next few months of Federal Reserve meetings. Still, it is going to take a lot more before we can confidently say that either metal is heading in the right direction for fresh highs in the next half of 2024.