This week, the precious metals market is witnessing significant momentum, with both silver and gold achieving impressive benchmarks. Silver has captured investor interest by surpassing the $46 per ounce mark, a level not seen since 2011. This increase represents a year-to-date rise of approximately 55%, outperforming gold.
Gold is also on the rise, nearing the notable figure of $3,800 per ounce. Several factors contribute to this upward trend, including recent developments in global markets.
Notably, China is positioning itself to bolster its influence in the international gold sector by exploring opportunities to serve as a custodian for foreign sovereign gold reserves.
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The evidence
Reports indicate that in recent months, China has engaged central banks from friendly nations, encouraging them to invest in gold and consider storing it within Chinese facilities. Analysts interpret this strategy as part of a broader trend towards de-dollarization, suggesting a move away from reliance on the US dollar in international trade.
If China successfully implements this plan, foreign gold reserves would be stored in specialized warehouses affiliated with the international board of the Shanghai Gold Exchange. Established by the People’s Bank of China in 2014, this platform facilitates gold trading between foreign entities and Chinese counterparts.
The reconstruction
In addition to China’s strategic initiatives, comments from Jerome Powell, chair of the US Federal Reserve, have influenced gold prices this week. Speaking in Providence, Rhode Island, Powell adopted a cautious stance on interest rates following a recent reduction of 25 basis points. Despite pressure from US President Donald Trump for more aggressive cuts, Powell has maintained a steady approach.
The implications of the Fed’s monetary policy are crucial for gold market dynamics, particularly as investors speculate on future price movements. Many analysts believe that with gold trading at historical highs, the question arises: can prices climb even further? Engaging with various experts on this topic reveals a prevailing sentiment that the surge in gold is far from over.
Key players
Market analysts suggest that the $4,000 mark, once viewed as a distant target, is now within reach, potentially achievable by the end of the year. As discussions of prices exceeding $4,000 become more frequent, investors are eager to understand the potential for further increases. However, experts caution that such rapid gains often invite corrections. Steve Barton from In It To Win It expressed skepticism about reaching $4,000 without experiencing some form of pullback. “Given the current momentum, a corrective move seems inevitable,” he stated, highlighting the market’s unpredictability.
The implications
In addition to the surge in precious metals, other sectors are experiencing notable shifts. For instance, the price of copper increased this week after Freeport-McMoRan declared a force majeure at its Grasberg copper-gold mine in Indonesia. This incident caused significant operational disruptions, resulting in revised sales projections and a decline in Freeport’s stock prices.
Prior to the incident, Grasberg accounted for approximately 3.2% of the global copper supply and a considerable portion of Freeport’s output. As the company recalibrates its production expectations, analysts are evaluating the broader implications for the copper market.
Conversely, Lithium Americas has experienced a dramatic increase in its stock price—over 100%—following reports that the Trump administration is considering a 10% equity stake in the company. This potential investment comes amid discussions regarding a $2.26 billion loan from the US Department of Energy related to the Thacker Pass lithium project, which aims to commence operations in 2028.
What happens next
Gold is also on the rise, nearing the notable figure of $3,800 per ounce. Several factors contribute to this upward trend, including recent developments in global markets. Notably, China is positioning itself to bolster its influence in the international gold sector by exploring opportunities to serve as a custodian for foreign sovereign gold reserves.0
