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In this week’s Market Report for Precious Metals we see all metals making some price corrections. This is a well-defined seasonal pattern. Looking back 15 or even 30 years, gold is typically overbought at the end of April, corrects in May and bottoms out in June. There are other factors pushing the precious metal price corrections currently, including renewed speculation that the Federal Reserve may raise interest rates soon. It is likely that metal prices will remain lower until the Federal Open Market Committee (FOMC) meeting in June. Low growth numbers out of Europe and slow GDP growth in Asia are signs that globally, countries may still be struggling avoid another recession. Central banks are still ruling with negative interest rates. Governments are not taking action through lowered taxes or fiscal stimulation. Purchasing Managers’ index (PMI) numbers come out on Wednesday, May 25th, this will be an indicator of the health of the U.S. economy. If growth remains slower it could be good reason to not raise rates in June, which would be good for gold and silver.
Gold started the week at $1270.10 on Tuesday, May 17th. On Thursday it was down to $1246.25, and Friday it was up a bit to $1254.20. On Monday gold ended at $1250.40. Most investors believe that this drop is price correction and not a sign that the 2016 gold run is finished. Gold has been up 2-3 standard deviations one month versus three months. Gold is still up 18% overall this year. The price corrections will likely continue until the Fed meeting in June, meaning June will likely be a good time to buy.
Silver started the week at $17.08, and was down to $16.60 on Thursday. On Monday silver ended down to $16.31. Silver is continuing its recent trend of following gold. Leading up to the FOMC meeting silver will likely drop more. If interest rates remain low and bond rates rise, silver and gold will gain more ground. Silver futures remain positive.
Platinum started the week at $1050, it was down to $1010 on Thursday and gained some ground on Friday ending at $1025.On Monday platinum ended at $1017. Palladium basically followed suit, starting the week at $588, hitting $567 on Fridayand ending Monday at $552. It is not uncommon for precious metals to fall in price when gold does, this trend will likely continue for the next couple of weeks, which means there will likely be good buying opportunities ahead.
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