Precious Metals Market Update

July 2024 Precious Metals Market Update

The precious metals market has always been a cornerstone of financial security and investment strategy. We are mid way through the year and the market continues to exhibit dynamic changes driven by various economic and geopolitical factors.

Gold Market Highlights

Unemployment data also contributed to market optimism, with the rate rising to 4.1% in June, the highest since November 2021. These factors helped gold prices rise, closing at $2,385/oz. Further improvements in inflation could prompt earlier rate cuts and boost gold’s outlook.

High gold prices have impacted physical gold demand in China. The Shanghai Gold Exchange (SGE) reported 86 tonnes of gold withdrawals in June, following 82 tonnes in May. This figure is 27% below SGE’s five-year average and 31% lower year-on-year. The decrease in withdrawals suggests that strong physical gold consumption in China earlier this year drove the gold rally. However, the recent plateau in prices above $2,300/oz may be due to reduced purchases by the People’s Bank of China (PBoC).

Silver Market Highlights

The rapid growth of artificial intelligence (AI) is expected to drive new industrial demand for silver. Generative AI’s expansion requires significant upgrades to infrastructure and hardware, including advanced semiconductors, data centers, and consumer electronics. Power demand for AI-backed computing and data centers is projected to exceed 1,000 TWh by 2026, nearly double the consumption in 2022.

The AI excitement could fade as did the metaverse, however there remains significant demand in the marketplace from consumers to businessess. More and more companies are adopting AI technology which to some degree is displacing workers. Nevertheless, the industry is currently thriving.

In 2023, global demand for electrical and electronics equipment, excluding solar photovoltaics, reached 251.6 million ounces (moz), accounting for 21% of total silver demand. This is forecasted to grow to 253 moz in 2024. As a crucial conductor metal used in various electronics, silver’s industrial demand is likely to increase with the AI boom. Silver prices closed at $31.38/oz on Friday, nearing June’s high. The metal has broken out of a downtrend channel, indicating a potential rally although Monday trading has seen continued downward trading across the precious metals market.

Current Precious Metals Market Snapshot

Today, silver is down $0.49, reflecting weak demand and possible profit-taking. Gold has also dropped by $32.70 due to reduced purchases by China’s central bank and a broader market selloff. Last week saw prices increasing. Both metals are fluctuating in a narrow trading zone.

Gold spot price traded up from just under $2000 to $2400 between mid February and April. It peaked at it’s all time high of $2425.98 and has since traded mostly between $2300 and $2400. Gold is near the 30 day high in this plateauing pattern.

Silver has also seen a favorable year trading up from $22 and edging just over $32 at it’s year high. Retail demand remains much lower than last year likely due to overbuying and increased spot price.


Conclusion

The precious metals market remains a critical area for investors seeking stability and growth. With the evolving economic landscape and technological advancements, the outlook for gold and silver continues to be dynamic and promising.

At USSAG, we offer a premier destination for all your precious metals needs, combining unparalleled expertise with a steadfast commitment to quality and customer satisfaction. Over the past few years we have quickly become a trusted name in the industry, providing a seamless and secure way to invest in gold and silver.

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