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Gold & Silver Prices Hit 15-Month Highs and Continue Rally Against Weak Dollar and Sluggish GDP Growth

01 May
gold and silver bars split

Gold & Silver Prices Hit 15-Month Highs and Continue Rally Against Weak Dollar and Sluggish GDP Growth

Stronger Dollar-Eurozone Fears

Gold and Silver Prices Hit Highs Vs. Weak Dollar

gold vs the weak dollar

Gold hit a 15-month high on Friday as the dollar got crushed. Gold opened with its fourth consecutive day of gains and climbed as high as $1,292 per ounce. The shiny yellow metal is now up 20% since the first trading session in January and silver is advancing with equal (if not greater) steam. A weak dollar and an economy that is barely growing are contributing to the precious metals’ impressive runs, and coin sales in the U.S. are on the rise. The Bank of Japan’s decision this week to keep interest rates low and the Federal Reserve’s continued policy on low rates also gave gold a boost this week.

Why this matters to precious metals investors:
A couple of months ago analysts were projecting gold to hit $1,300 by the end of this year. It is already fast approaching that mark. Some are now even saying it could hit $1,400 by next month. Unexpected and negative projections for the dollar’s future are accelerating gold’s move making now a ripe opportunity for buying.


Rocketing Silver Set for Best Month Since 2013 as Gold Climbs

Silver is the Star

Silver was at a one year high this week and up 15% this month thanks to the dollar’s slump and rise in industrial demand. A stabilizing Chinese economy with increasing demand for precious metals is also partially responsible. All precious metals were up this week because of worse-than-anticipated economic growth this quarter that lowered the prospects of higher interest rates. Low interest rates makes non-interest yielding assets like gold and silver more appealing.

Why this matters to precious metals investors:
Precious metals are on the move. After three years of falling prices, all signs are now pointing towards positive growth trends for both gold and silver through this year. This Bloomberg graph shows the sustained upward climb of gold and silver against a steady decline of the dollar. The dollar value and precious metals value move in opposition to one another, and with a bleak outlook for the dollar this year, gold and silver have every reason to continue their march.


Weak GDP Growth in Q1 Weakens Dollar

Dollars down the drain

Lackluster economic data coming out this week on U.S. GDP growth is expected to keep the dollar on its downward spiral. In the first quarter this year, real GDP grew only 0.5%. This was the third consecutive quarter of growth slowdown.

Why this matters to precious metals investors:
Gold and silver become increasingly attractive as a safe haven investment as the economy slows. During times of recession and a shrinking economy, gold has had some of its highest price runs. The warning signs of a potential economic downturn are increasing. Buying now will protect against these future uncertainties.


Gold Price Climbs After Fed and Bank of Japan Decisions to Stand Pat on Policy

Bank of Japan and Federal Reserve Logos

The Bank of Japan’s decision to maintain a tight monetary policy this week came as a surprise to many analysts, who were expecting a stimulus, and sent shockwaves into the markets this week. Similarly, investors looking for the Fed to change course from recent cautionary policy instead got more of the same following a Federal Reserve meeting that confirmed that it was in no rush to raise interest rates anytime soon. Both of these events helped to boost gold prices. The dollar fell sharply against the yen and a basket of currencies following the news. On the U.S. monetary front, expectation that a Federal Reserve rate hike would happen before September is dwindling and traders’ expectations for such a hike occurring fell over five percentage points this week.

Why this matters to precious metals investors:
The monetary policy course that the Federal Reserve has set out on will continue to boost the price of gold as well this year if it stays on course. Analysts are also now saying gold has finally found its price floor after the past few years, which can only be positive for gold’s future. The pieces are in motion to see gold make great gains this year.


Here are some articles from the web discussing the topics in this week’s post:

Gold and Silver Prices Hit Highs Vs. Weak Dollar
Read Here

Rocketing Silver Set for Best Month Since 2013 as Gold Climbs
Read Here

Weak GDP Growth in Q1 Weakens Dollar
Read Here

Gold Price Climbs after Fed and Bank of Japan Decisions to Stand Pat on Policy
Read Here


 

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

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