The tug-of-war between contradictory economic indicators is keeping gold prices on a rollercoaster ride, as silver faces production challenges in different regions, Heraeus analysts reported.
Traditionally, gold prices have moved inversely to yields on the 10-year US Treasury note, but this relationship has faltered in the past two years. Despite rising bond yields, gold has been hitting all-time highs, with strong support from Chinese investors and the People’s Bank of China.
The shift in gold’s price dynamics from West to East has been driven by factors like reserve asset diversification and global geopolitical instability. Chinese investors played a crucial role in the recent rally, importing 565.9 tonnes of gold in the first quarter of 2024.
On the other hand, silver production is expected to decline globally, despite Mexico’s efforts to ramp up production. While Newmont anticipates an increase in silver output this year, potential production declines in Peru could offset these gains.
Silver prices have been trading positively, with spot silver last seen at $27.285 per ounce.
Overall, the precious metals market continues to be influenced by a myriad of factors, from economic indicators to geopolitical events. Gold and silver prices remain volatile, reflecting the uncertainties in the global market.
