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Gold and Silver Both Remain Strong as Inflation Fears Persist

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  • Gold Finishing Week Strong
  • Silver Continues Run Higher 
  • Inflation and Other Key Factors at Work

In commodities news, it has been another strong week for gold prices. Even though they have seen no big surge, they still approach the weekend holding steadily above $1830. This coming off the back of a rebound in some equities markets on Friday but with continuing fears around the response of the economy. Silver too continues its own remarkable run having moved up more than 70% in the last 12-months. There are many factors at play in the pricing of both that includes an under-enthusiastic USD forex market coupled with supply chain issues around the world.

Gold Remains Steady and Climbing

Gold markets have been more volatile than usual of late. Some stability has returned to the market this week though as prices climbed consistently toward the $1850 mark and some of the highest highs in recent months. This climb appears to have been driven by the risk-off approach adopted by many market traders on Wall Street. Particularly earlier in the week, the safe-haven status of gold rang true even above that of the Dollar.

Playing into the hands of a potentially increasing gold price is the flexible approach of the Federal Reserve although this will continue to been keenly watched. A weakened US Dollar which saw the US Dollar Index decline this week will also help bolster gold prices with analysts expecting a move higher on this confluence of events added to market overheating fears.

Silver Continues to be a Winner

Traders have not only looked to gold this year. Markets have also favored silver for several reasons. This precious metal has managed to add about 70% to its value over the course of the last year. This is in line with other commodities and metals like copper that are all continuing to move upward on demand from industry coupled with supply constraints created by a somewhat log-jammed supply chain.

Silver is trading above $27 this week though and as the global economy continues to reopen at pace, industrial demand for silver is sure to keep coming while the move toward more green energy solutions appears to have further heightened demand. Silver is widely used in electrical components but also in the production of solar panels which have seen a spike.

Inflation Stays in Focus Moving Forward

While there are other considerations moving the prices higher, a weakened Dollar along with uncertain treasury yields for gold, and huge demand from rebounding industries for silver, the key theme at least for the former, and even a little for silver, is inflation.

It is a fear that has both gripped and tormented markets on Wall Street this week and which could well see these precious metals hold their value even as the country continues to get back to work. Fed policy will continue to be watched in the week ahead with many also keeping a close eye on their safe-haven precious metals.

Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.

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