Earlier this week, the price of gold exceeded $3,600 an ounce as the greenback’s value dropped to a 6-week low. Spot gold saw its price surge to $3,621 an ounce, representing a 0.8% increase. This comes as America records the weakest growth in jobs in over a decade.
Following the release of the disappointing non-farm payrolls data, the expectation of 3 rate cuts by the Federal Reserve by the end of the year increased to 74%, from the 40% recorded just a few days prior.
The Dollar Index also slipped to its lowest since July 25th as markets assessed growing expectations of the Central Bank reducing rates of interest amid worries over the Trump administration’s criticism on the Fed’s independence, and the subsequent concerns of expanding fiscal deficits. Since President Trump began his second term earlier this year, the greenback has seen its value drop by 10.7%.
At the same time, gold has recorded a 33.4% increase in its price. This is as more investors turn to the precious metal to hedge against rising inflation, diversify their portfolios and/or preserve their wealth amid economic uncertainty.
MKS Pamp’s Head of Metals Strategy, Nicky Shiels, explained that the rise in gold prices was driven by dollar weakness. It is well known that the U.S. dollar and gold have an inverse relationship. As governments worldwide loosen fiscal restraint and money supply surges to unprecedented levels, hard assets such as gold and other precious metals are gaining in relative value.
Other metals like platinum and silver may deliver even higher returns, despite being undervalued in comparison to gold. Platinum is classified as a critical mineral by the U.S. Geological Survey, which recently recommended that silver also be added to this list. Silver recently surged to $41.34 an ounce, representing a 1.5% increase. Roughly 60% of the metal’s yearly demand is driven by industrial uses.
Since Trump began his second term, the metal has seen its price increase by over 35%. Platinum also saw its price rise to $1,407 an ounce, recording a more than 48% increase in its price since Trump took office earlier in the year. About 75% of the metal’s demand also comes from industrial applications, primarily driven by autocatalysts.
Overall, many expect gold prices to continue climbing, fueled by forecasts that part of foreign demand will move away from U.S. Treasuries to gold as more foreign investors lose confidence in America.
The bullish outlook for gold puts companies like Aston Bay Holdings Ltd. (TSX.V: BAY) (OTCQB: ATBHF) in a favorable position to attract the investment that they need to advance their gold exploration programs.
NOTE TO INVESTORS: The latest news and updates relating to Aston Bay Holdings Ltd. (TSX.V: BAY) (OTCQB: ATBHF) are available in the company’s newsroom at https://ibn.fm/ATBHF
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