Gold Rallies Amid Meltdown in Stocks

The start of this week saw prices of silver and gold increase significantly, a welcome relief after stock markets globally extended their losing streak amid rising concerns that massive AI-related capital spending driven by major tech firms may be forming a bubble. Gold’s price in dollars rebounded by over $80 an ounce after briefly slipping under $4,000 while silver also rose to $50.83. 

Sundar Pichai, Alphabet’s CEO, argues that no firm is exempt from the risks of an AI investment collapse. He also cautioned users against placing faith in AI chatbot responses, noting that the early 2000s tech crash that occurred during the dot-com era was similar to today’s situation. 

This year’s capital expenditure is $70 billion for Meta, $80 billion for Microsoft, $90 billion for Alphabet, and roughly $125 billion for Amazon. Despite occupying top spots of the most valuable American companies, these tech giants began this week’s session trading nearly 2% lower on average. 

Over in China, Baidu extended its recent slide, falling by nearly 25% from its two-year high. The drop followed earnings showing that although the firm posted a 50% year-on-year jump in revenues from AI services, it still recorded a net loss for their recent quarter. Broad equity markets also weakened, with the FTSE All-Share falling to a four-week low while the EuroStoxx 600 slipped to its lowest level since September. 

Over in the ETF space, the SPDR Gold Trust saw investors pull enough funds to reduce its bullion holdings by over two tons, bringing the total to a low of about 1,040 tons. The iShares Gold Trust held steady at its largest size in nearly a month, with the iShares Silver Trust also remaining unchanged. 

Nvidia, an AI chip manufacturer with a market cap of $4.5 trillion, has fallen nearly 10% since its last month high. The company is set to release its Q3 results soon. 

Minutes from the Fed’s policy meeting of late last month, which saw interest rates get reduced by 0.25 percentage points, are also due soon. Stephen Miran, who’s served on the Federal Reserve’s Board since his appointment by the Trump administration, argued that a more aggressive half-point reduction was in order. 

This opinion wasn’t shared by all though, including Jeffrey Schmid, who argued that not reducing the rates was the best option. An analysis of the vote shows that this was the sixth time in over 3 decades that the customarily aligned Federal Open Market Committee saw a three-way split. 

The upcoming meeting in December will be closely observed by players in the gold industry like Torr Metals Inc. (TSX.V: TMET) as any outcome could have a bearing on the trajectory of gold’s price over the coming weeks. 

NOTE TO INVESTORS: The latest news and updates relating to Torr Metals Inc. (TSX.V: TMET) are available in the company’s newsroom at https://ibn.fm/TMET 

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