Banyan Gold Corp. (TSXV: BYN, OTCQB: BYAGF)
The New Yukon Gold Rush
On Thursday, gold prices rose more than 1%, reaching a new historical peak, driven by recent U.S. economic data that bolsters expectations for a Federal Reserve interest rate cut next week. Spot gold prices climbed 1.7% during the session to $2,554.05 per ounce, while U.S. gold futures settled at $2,580.60 per ounce, up 1.5%.
Additionally, spot silver rose 3.7% to $29.76 per ounce, platinum increased 3% to reach $979.62 per ounce, its highest level in nearly two months. Palladium climbed 4.1% to $1,050 per ounce, marking a two-month high. Meanwhile, the U.S. dollar weakened against a basket of major currencies following the European Central Bank’s second benchmark rate cut in three months to combat falling inflation.
According to the U.S. Department of Labor, the Producer Price Index (PPI) for August rose by 0.2% month-over-month, with the previous figure revised down from 0.1% to 0%. The core PPI, excluding food and energy, rose 0.3%, surpassing the expected 0.2% increase. The PPI data slightly exceeded expectations mainly due to rising service costs but maintained the overall trend of slowing inflation. Additionally, initial claims for U.S. unemployment benefits increased by 2,000 to 230,000, also higher than expected.
Capital Economics analyst, Paul Ashworth, stated in a report, “The August PPI data gives the Fed more encouragement that inflation is under control.” Alex Ebkarian, COO of Allegiance Gold, remarked, “We are heading into a low-interest-rate environment, making gold more attractive… I foresee smaller, more frequent rate cuts rather than large cuts.” In a low-interest-rate environment, non-yielding gold becomes more appealing to investors.
According to the CME FedWatch Tool, the market currently anticipates a 73% probability of a 25-basis-point rate cut by the Fed at its September 17-18 meeting, with a 27% probability of a 50-basis-point cut. Phillip Streible, Chief Market Strategist at Blue Line Futures, mentioned that if the labor market deteriorates, the rate cut process might extend over a longer period.
Ole Hansen, Head of Commodity Strategy at Saxo Bank, commented that factors including the ECB rate cut, a slight increase in initial jobless claims, and PPI data were enough to drive gold prices to historical highs, along with strong central bank buying and robust demand in the over-the-counter market pushing gold prices higher.
