Spot gold prices were up 1% on Monday with the U.S. Dollar finally showing some weakness, slipping 1.2% amid faltering Treasury yields. Gold was at $1,656.09 and moving away from the two-week low it touched last week. Gold futures were also up .79%
“The dollar’s significantly lower… Yields are ticking lower,” said Bob Haberkorn, senior market strategist at RJO Futures, who also noted some “safe-haven demand with heightened geopolitical risks.”
Silver also had a big day, rising 2.45% up to $18.70 per ounce after stumbling recently.
The Short-Term Headwinds and the Long-Term Bullish Case
A panel discussion at the London Bullion Market Association’s annual precious metals conference revealed that many participants anticipate rising interest rates to be a headwind, but given the ongoing geopolitical risks and more persistent inflationary environment, gold and silver could continue to see gains. DRW Investments portfolio manager Darren Botha said to Kitco that, “the central bank will not be able to get interest rates up to where they need to be to get inflation under control. When rates eventually peak, that will be a good environment for gold.”
The other big indicator is physical demand, which has been outpacing supply. Matt Slater, global head of precious metals forwards and physical trading at UBS said, “gold is ultimately a physical market and that tells you what the trend is.”
“We just can’t make enough gold and silver products.” He also noted that the traditional 60/40 portfolio is having its worst year in a century, further pushing the case for safe haven assets.
Sprott has a suite of precious metal funds to help investors play a rebound in gold and silver. For gold, the Sprott Physical Gold Trust (PHYS ) or the newly launched Sprott ESG Gold ETF (SESG ), which sources gold from environmentally friendly mines, can both provide physical exposure to gold. An equities play is possible through gold miners such as the Sprott Gold Miners ETF (SGDM ) or the Sprott Junior Gold Miners ETF (SGDJ ). Investors can get silver exposure through the Sprott Physical Silver Trust (PSLV).
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