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Precious metals miners scored big gains in Tuesday's trading, as gold futures settled at an all-time high following comments from Federal Reserve officials that ramped up expectations of a U.S. interest rate cut in September.
Front-month Comex gold (XAUUSD:CUR) for July delivery closed +1.6% to $2,462.40/oz, while front-month July silver (XAGUSD:CUR) finished +1.7% to $31.195/oz.
ETFs: (NYSEARCA:GLD), (NYSEARCA:GDX), (GDXJ), (IAU), (NUGT), (PHYS), (GLDM), (AAAU), (SGOL), (BAR), (OUNZ), (SLV), (PSLV), (SIVR), (SIL), (SILJ)
Among the day's biggest stock market movers in the space: Harmony Gold (HMY) +16.1%, DRDGold (DRD) +10.8%, NovaGold (NG) +6.3%, Gold Fields (GFI) +6.2%, First Majestic Silver (AG) +5.8%, MAG Silver (MAG) +5.4%, SSR Mining (SSRM) +5.3%, Sibanye Stillwater (SBSW) +5.3%, Barrick Gold (GOLD) +4.8%, Endeavour Silver (EXK) +4.6%, Hecla Mining (HL) +4.5%, Wheaton Precious Metals (WPM) +4.4%, Pan American Silver (PAAS) +4.2%, B2Gold (BTG) +3.9%.
Gold looks strongly bullish in the short term on growing expectations that the Fed will begin cutting U.S. interest rates in September, which were confirmed by commentary from Fed Chair Jerome Powell on Monday, which kept U.S. Treasury yields low and maintained positive outlooks for non-interest bearing bullion, XS.com analyst Rania Gule said, according to Dow Jones.
"Gold surged to new all-time highs despite stronger than expected core retail sales data, encouraged by [Fed Chair] Powell indicating yesterday that the Fed was growing more confident that inflation was back on its way to target," independent metals trader Tai Wong told Reuters, which "essentially etches a September cut in stone barring an inflation calamity in the coming weeks."
"Thanks largely to weakness in economic data, and falling inflationary pressures, bond yields are continuing to remain under pressure, [which] is helping to boost the appeal of low- and zero-yielding assets, and thereby keeping the gold outlook positive," City Index analyst Fawad Razaqzada said, according to Reuters.
A report from Citi analysts suggests gold prices might keep surging all the way to $3,000/oz, as financial flows show potential for significant expansion.
The weakening U.S. labor market, the broader trend of disinflation and a notably soft June CPI print strengthens the argument for a dovish pivot by the Fed at the upcoming July FOMC meeting, which "should be bullish for gold and silver into year-end," Citi said.
The bank noted the impact of previous Fed cuts on precious metal prices, saying median annualized returns for precious metals were 13% in the six-month period following the first Fed cut across the past four cycles.
Citi also emphasized the recent inflows into bullion ETFs, which posted net inflows in June for the first time in the trailing 12 months, with July continuing the trend, potentially foreshadowing "a critical reversal of a 43-month net de-stocking trend totaling some ~925 [tons]," suggesting a significant bullish turn for gold.
