The recent rally in gold ($GOLD ) and silver ($PHAG (+0,17%) ) continued on Monday. The prices of both precious metals benefited in particular from hopes of falling key interest rates in the US. Gold and silver do not yield any market interest, which means that they will become more attractive than fixed-interest securities or overnight money in the event of an easing of US monetary policy.
The price of a troy ounce of gold (approx. 31.1 grams) rose to just under USD 3,490 at the start of the week. This was only a good 10 dollars short of the record high of around 3,500 dollars reached at the end of April. Most recently, the daily gains melted away somewhat to just under 3,472 dollars. In euro terms, gold is currently trading at 2,963 euros. The high of almost 3,036 euros reached in April is also within sight.
As can be seen from futures contracts on the money market, the market is expecting a probability of almost 90 percent that the US Federal Reserve will cut key interest rates at its next meeting on September 17. One of the main reasons for this is the weak labor market data for July. If this trend is confirmed in the August data due on Friday, this would be a further argument for a rate cut in just over two weeks' time.
Gold is also benefiting from its status as a relatively safe haven in politically uncertain times. On the one hand, the unabated Russian war of aggression against Ukraine is prompting investors to turn to the precious metal.
On the other hand, investors are also concerned about the political independence of the US Federal Reserve, which not only has to keep an eye on the labor market, but also on the consequences of customs policy for inflation. President Donald Trump is considered a vehement advocate of lower interest rates and has recently increased the pressure on the central bank by seeking the dismissal of Fed Governor Lisa Cook. Cook is currently taking legal action against her dismissal.
Lower interest rates make investments and loans cheaper and should therefore boost the economy. This in turn should also benefit silver, which is considered an industrial metal to a greater extent than gold. In this environment, the price of silver rose above USD 40 per ounce for the first time since 2011.
Silver and gold prices have roughly doubled in the last three years. In recent months in particular, the fact that the dollar has lost value against other major currencies due to speculation about falling US interest rates has also played a role. As a result, precious metals denominated in dollars have become cheaper for investors outside the dollar zone.
Demand for gold is also currently being driven by private investors' need for a broad diversification of their investments. As a result, securities backed by the precious metal are increasingly being purchased.
Strategist Charu Chanana Saxo Capital Markets also believes that the prices of gold and silver are currently supported by the charts. Gold has overcome resistance at 3,450 dollars and silver has broken through the round and therefore psychologically important 40 dollar mark. This has attracted buyers who assume that the strong price rises are likely to continue for the time being.