Summa Silver Corp. (TSXV: SSVR, OTC: SSVRF, FRA: 48X)
Silver Lives Here
From July to the end of October, the price of gold continues to hit record highs, from $2,400 per ounce to $2,800 this week. Behind the rally, there are geopolitics in middle east, Fed’s interest rate cuts, U.S. election and many other uncertainties supporting the precious metal. Aside from that, the FOMO (Fear of Missing Out) sentiment also plays an important part.
In its latest report released this week, the World Gold Council wrote that the gold market has seen a significant increase in investment demand over the past few months, mainly from investors in Western markets, and in the third quarter, gold ETFs saw net inflows for the first time in ten quarters.
Meanwhile, global central banks continued to buy 186.2 tonnes of gold in the third quarter, down 49% year-on-year. However, net global central bank gold purchases remained roughly the same as 2022 during the first three quarters.
With the price of gold hitting a new all-time high of over $2,800 per ounce this week, less than a week before the final hours of the U.S. presidential election, the $3,000 gold price predicted by some investment banks and analysts earlier this year seems within reach.
There is a famous saying in the financial market called “buy the rumour, sell the fact.” Does this mean that after the dust settles after next week’s U.S. presidential election, investors will sell their holdings of precious metals in pursuit of profit-taking?
The U.S. Department of Labour released its non-farm payrolls report for October on Friday, adding just 12,000 new jobs, down sharply from September’s revised 254,000 and well below Bloomberg’s estimate of 105,000 and FactSet’s forecast of 120,000.
Following the jobs report, gold weakened on the headwinds of a stronger dollar and rising Treasury yields.
Dennis Gartman, a leading commodities investor, said the precious metal’s price will continue to be well-supported as gold has attracted more investor attentions, in addition to geopolitical turmoil triggered by the current election, as the U.S. economy and labour market slow down. Despite any short-term weakness, gold’s long-term fundamentals remain well supported, he added.
Gold is likely to perform well regardless of the outcome of the U.S. election, as geopolitical risks remain high in the near term, ING analysts wrote in a report on Friday.
Analysts believe the Federal Reserve will continue to lower interest rates as the labour market weakens. While the pace of rate cuts may not be as aggressive as expected, rising inflation means real interest rates will fall, which will hurt the dollar and help support gold prices eventually.
