Banyan Gold Corp. (TSXV: BYN, OTCQB: BYAGF)
The New Yukon Gold Rush
After its two-day monetary policy meeting on Wednesday, the Federal Reserve announced that it would leave the target range for the federal funds rate unchanged between 5.25% and 5.5%, and released a signal that it would probably only cut rates once in 2024.
However, the precious metals market appeared to anticipate this, with August gold futures last trading at $2,345.80 per ounce, up 0.79 per cent, after the rate resolution was announced.
Ruth Crowell, chief executive of the London Bullion Market Association, told Reuters on the sidelines of the Asia-Pacific Precious Metals Conference in Singapore that there are a number of reasons that are currently driving up the price of gold, and one of the main factors is China. Considering the challenges facing the Chinese economy, real estate market and stock market, gold will remain the primary investment for a long time.
Central banks around the world, especially China, have been increasing their gold reserves in the last few years due to currency devaluation and geopolitical and economic risks. Traditionally, gold has been seen as the asset of choice to hedge against geopolitical and economic risks, and has typically performed strongly in a low interest rate environment. This, coupled with the fact that the US election in November is likely to bring more volatility to the market, has also fuelled investment demand for gold to some extent.
Nikos Kavalis, managing director of Metals Focus, says there are good reasons to be bullish on the gold price, although $3,000 an ounce means it will be quite difficult for the price to rise by another 30 per cent from now.
Amar Singh, head of metals for Asia-Pacific and the Middle East at StoneX, says there is strong physical demand for gold, but retail investment demand from exchange-traded funds, as well as investment demand in the U.S., is still relatively muted, and is bullish on gold prices rising to between $2,600 and $2,700 an ounce this year.
Against the backdrop of stronger gold prices, the price of silver, is also rising. But unlike gold, silver has 50 per cent industrial demand. Spot silver traded at $29.20 an ounce by Tuesday’s close, not far from an 11-year high set in May.
Michael Di Rienzo, president and CEO of the Silver Institute, said silver has a bright future in the green energy transition. In addition, there is room for the price of gold to move higher, so the price of silver will follow.
India’s silver imports in the first four months of this year have already exceeded the total for the whole of 2023 due to rising demand from the solar panel industry and investors betting that silver will perform better relative to gold, government and industry officials told Reuters last month. While Metals Focus, in a research report for the Silver Institute, noted that the silver market is now in the fourth year of consecutive structural market deficits as industrial demand is expected to increase.
