Commodity wrap: gold, silver continue rally on anxieties on US economy; oil rises
NEW YORK (October 8) Prices of major commodities rose on Wednesday with gold breezing past the $4,000-per-ounce mark for the first time ever.
Investors in the oil market shrugged off fears of oversupply with prices rising more than 1%.
Silver and copper prices were also higher on Wednesday.
Gold zooms past $4,000
Spot gold reached an unprecedented high of over $4,000 per ounce this morning.
This surge is attributed to growing anxieties about the US economy and a government shutdown, both of which are driving investors towards safer assets.
In Wednesday’s trading, December futures in New York, the most actively traded contract, had already surpassed the $4,000 per ounce mark. This indicated a sustained upward trend in gold prices.
“Gold has staged a historic rally, doubling in less than two years, spurred by central bank buying as it diversifies away from the US dollar, President Donald Trump’s aggressive trade policy, and conflicts in the Middle East and Ukraine,” ING Group’s analysts said in a note.
Meanwhile, investors are adding gold ETFs at a rapid pace.
According to ING Group, gold ETFs have seen inflows for a ninth consecutive session, with total known holdings increasing by 30.2 thousand ounces to 97.4 million ounces as of Tuesday.
Gold ETF holdings have reached their highest level since September 2022, with net inflows totalling 14moz year-to-date.
Central banks, notably China’s, continue to acquire gold despite record prices.
Ongoing trade wars, elevated geopolitical risks, expanding ETF holdings, and anticipated Fed rate cuts all point to continued gold demand.
ING analysts said:
All of this suggests that gold has still further room to run.
Oil rises
West Texas Intermediate crude prices are currently experiencing an upward trend for the fourth consecutive session, trading above $62 per barrel.
This movement follows a mixed inventory report from the American Petroleum Institute (API) and is further influenced by recent reports of Ukrainian drone attacks on Russian oil refineries.
These attacks have reportedly reduced Russia’s domestic crude processing, leading to an increase in unprocessed oil flowing overseas.
According to the latest API figures, crude oil inventories rose by 2.8 million barrels last week, significantly exceeding the market forecast of a 497,000-barrel build.
However, stocks at Cushing, the WTI delivery hub, saw a decrease of 1.2 million barrels. In terms of refined products, gasoline inventories fell by 1.2 million barrels, and distillate stocks declined by 1.8 million barrels.
“The decline in refined product stocks provided mixed signals on energy consumption in the country,” ING analysts said.
The more widely followed EIA weekly inventory report will be released later on Wednesday.
At the time of writing, the price of WTI crude was at $62.55 per barrel, up 1.3%, while Brent was 1.1% higher at $66.18 a barrel.
Silver
Following gold’s trend, silver has also continued its ascent. At the time of writing, the most-active COMEX contract was at $48.720 per ounce, up 2.6% from the previous close.
Thu Lan Nguyen, head of FX and commodity research at Commerzbank AG, said in a Tuesday report:
The “little brother” (silver) is likely to remain influenced by gold for now.
Commerzbank has revised its silver price forecast upwards to $49 per ounce by the end of this year and $50 per ounce by the end of next year.
Previously, these figures stood at $41 and $43, respectively.
Silver is still working to catch up with gold, according to David Morrison, senior market analyst at Trade Nation.
Both precious metals, however, are demonstrating impressive resilience.
This is attributed to a combination of factors including safe-haven investments, speculative interest, and the expectation that the Federal Reserve will further ease monetary policy later this year, Morrison said.
Invezz.com
