Background on Key Figures and Context
The precious metals market, including gold, silver, platinum, and palladium, experienced significant gains at the start of the week. This surge can be attributed to several factors, including investor demand for safe-haven assets, a weakening US dollar, expectations of interest rate cuts by central banks, and geopolitical tensions.
Who is Giovanni Staunovo and Why is He Relevant?
Giovanni Staunovo, an analyst at UBS, provided insights into the factors driving the precious metals market. His expertise and analysis are crucial in understanding the dynamics behind these market movements.
Key Market Movements
- Gold: Gained 1% on Monday, nearing its highest level in seven weeks. Supported by a weaker US dollar, anticipation of interest rate cuts, and safe-haven buying due to geopolitical tensions.
- Silver: Also rose, though it remained below its historical peak reached on Friday. The spot silver increased by 2.8%, trading at $63.76 per ounce.
- Platinum and Palladium: Both metals experienced gains. Platinum rose by 1.1% to $1,763.67 per ounce, while palladium gained 2.4% to $1,523.11 per ounce.
Factors Driving the Precious Metals Market
- Weakening US Dollar: The US dollar was near two-month lows, making gold cheaper for foreign buyers and boosting demand.
- Declining Yield on US Treasury Bonds: The yield on 10-year US Treasury bonds fell, further supporting the precious metals market.
- Investor and Central Bank Demand: Strong demand from investors over the past three months, along with central banks’ continued purchases, has bolstered gold prices. Additionally, investors anticipate even lower interest rates in 2026.
- Geopolitical Tensions: Uncertainty in global affairs has driven investors to safe-haven assets like gold.
Recent Monetary Policy Developments
The Federal Reserve recently cut interest rates by 25 basis points in a closely divided vote. Future rate adjustments will depend on labor market conditions and inflation levels.
Market expectations currently point to two interest rate cuts in the US next year. Investors will closely monitor the upcoming non-farm payrolls report for further insights into monetary policy.
Assets that do not pay interest, such as gold, typically benefit from a low-interest-rate environment.
Silver’s Recent Performance
Silver has seen a remarkable 120% increase this year, driven by supply shortages and its inclusion in the US list of critical minerals.
Key Questions and Answers
- What is driving the gains in precious metals? Factors include investor demand for safe-haven assets, a weakening US dollar, expectations of interest rate cuts by central banks, and geopolitical tensions.
- Why is the weakening US dollar beneficial for precious metals? A weaker US dollar makes gold cheaper for foreign buyers, increasing demand.
- What are the expectations regarding future interest rate cuts? Market participants anticipate two interest rate reductions in the US next year.
- How has silver performed this year? Silver has experienced a 120% increase this year, driven by supply shortages and its inclusion in the US list of critical minerals.
