How many legs does gold have left in its current rally? What about silver? And can copper staunch the losses as more metal than the market can handle ends up in LME and Shanghai Metals Market stockpiles?
While oil recovered last week, its outlook is hazy. Even though iron ore edged higher late last week, it still ended the week down compared to the previous Friday and well off its most recent highs.
In fact, the brief commodities boom in May has mostly ended as hedge funds and other momentum investors vanish, with the AI tech surge regaining center stage.
US bond yields, the value of the US dollar, and the level of American interest rates will be key factors. The results of next month’s French and UK elections could add to the appeal of gold, silver, and US dollar investments as safe havens.
However, investors and traders will have to contend with Donald Trump and the volatility and confusion his policies will bring to the markets, both before the early November polls and afterward, especially if he loses.
On Friday, gold traded higher late in the week, rebounding from a five-week low touched a day earlier despite a stronger dollar and as Treasury bond yields dipped.
Comex gold futures for August delivery were up 1.3% on the day to $US2,348.40 per ounce and up 1.6% over the week. Gold touched a record $US2,454.20 per ounce on Comex on May 20 on expectations of quick cuts to US rates, but that changed, and the metal now languishes nearly $US100 an ounce below that high with no sign of any drive to take it back there.
Silver ended at $US29.63 on Comex for a gain of 1.2% for the week. Comex copper ended at $US4.49 a pound, higher on the day and up 1.1% for the week, but also well under its May high of $US5.1999 a pound.
Iron ore in Singapore finished the week at $US107.50, up 1% for the day but down $US1.23 a tonne for the week.
Newcastle thermal coal prices ended around $US135 a tonne, up 1.6%.
The Fed decision has supported the dollar, with the dollar index last seen up 0.32 points to 105.52. The Aussie again ended the week above 66 US cents at 66.15.
After the improvement in the inflation outlook in May, US Treasury yields eased, with the 2-year bond last seen down to 4.704%, and the 10-year security at 4.28%, down 2.9 basis points on the day and a massive 21 points for the week.