Precious and base metals started July with a bang, rising sharply thanks to expectations that central banks from around the globe will launch new stimulus measures to shore up growth after the UK’s surprise vote to leave the EU.
Gold on the Comex division of the New York Mercantile Exchange closed Friday up $18.40, or 1.5 percent, at $1,339.00 per ounce. Trade ranged from $1,323.10 to $1,338.70.
“After the month end squaring, gold again lifts off on the first trading day of July, as macro issues continue to auger for higher gold prices,” Kitco’s Peter Hug noted.
Comex silver meanwhile continued to power higher also – it was last up $1.242, or 6.67 percent, at $19.865 per ounce, which marks a 22-month high.
“We said recently that silver’s latest rebound has the potential to become a second up leg that drives prices to new highs for the year – this has happened,” FastMarkets head of research William Adams said.
“The UK leaving the EU may well cause contagion – it creates considerable uncertainty, which is likely to be bullish for gold and therefore silver. We are overall bullish for silver but we are wary of the potential for profit-taking,” he added.
The main catalyst for higher precious metal prices are expectations that central banks will soon announce another wave of stimulus programmes.
“The common argument we hear from gold participants is that gold is currently benefiting from a fear trade on Brexit, and that may indeed be the case,” Credit Suisse said, predicting that the metal will reach $1,500 early next year.
“But we think this recent fear trade leads to something more enduring as the surprise Brexit vote has solidified and intensified macro and political uncertainty and extended the time frame for a negative real rate environment in the US and potentially abroad,” it added.
Data today was mostly disappointing. The Caixin Chinese manufacturing PMI for June at 48.6 was below the forecast of 49.1 and May’s 49.2. This was the third monthly decline in a row and the steepest deterioration in manufacturing conditions since February. It was also the 16th straight month where the index was below the neutral 50 value.
“Overall, economic conditions in the second quarter were considerably weaker than in the first quarter, meaning there has been no easing of the downward pressure on growth.
The government must strengthen its proactive fiscal policy while continuing to follow prudent monetary policy,” Zhengsheng Zhong, an analyst at CEBM Group, said.
China’s official manufacturing PMI for June at 50 was in line with expectations and down slightly from May’s 50.1. The country’s non-manufacturing PMI for May at 53.7 was up from May’s 53.7.
In the base metals, Comex copper for September delivery finished up 2.15 cents at $2.2170 per pound. Trade ranged from $2.1635 to $2.2195.
“The base metals seem to be taking all this in stride as it seems that weaker Chinese macro numbers are now being interpreted as reasons for further easing,” INTL FCStone analyst Edward Meir said.
In the wider-markets, the euro was 0.2 percent softer at 1.3285 against the dollar while the Dow Jones industrial average and S&P 500 were up 0.17 percent and 0.24 percent respectively.
The post Gold, silver and copper surge to start July appeared first on The Bullion Desk.
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Source: Bullion Desk News
