Pasofino Gold Limited (TSXV: VEIN)
Re-defining the Dugbe Gold Project
On Tuesday (June 17), escalating tensions in the Middle East fueled safe-haven demand, driving silver prices sharply higher to break through $37 per ounce—a level not seen since 2012. Spot silver rose 2.2% intraday to $37.26/oz, while silver futures in New York similarly climbed to $37.33/oz.
The primary catalyst for silver’s surge was heightened market uncertainty over the potential for more direct U.S. involvement in the Iran-Israel conflict. Although precious metals typically benefit from geopolitical crises, gold’s performance remained subdued this time, with spot prices edging up just 0.2% to stay below $3,390/oz. This divergence further narrowed the gold-silver ratio, pushing it toward a three-month low.
Notably, gold and silver have shown persistent divergence over the past four trading sessions. Data from BullionVault reveals that over the past 50 years, gold and silver prices moved in the same direction 78.9% of the time, but this correlation has dipped to 75.7% over the last 12 months. Carsten Menke, Head of Research at Julius Baer, noted, “Despite rising geopolitical risks, gold’s muted reaction aligns with historical patterns—such shocks rarely sustain higher gold prices for long.”
However, bullish sentiment toward gold remains strong. UBS stated in a report, “The recent consolidation in gold prices may signal the next upward move.” Nicky Shiels, a strategist at MKS Pamp, emphasized that a direct conflict between Israel and Iran could trigger a broader global crisis, potentially driving gold to challenge its April all-time high of $3,500/oz.
In contrast, silver’s rally is bolstered not only by safe-haven demand but also by growing industrial applications. Citi forecasts that silver prices could climb further to $40/oz within the next 6 to 12 months.
Looking ahead, gold’s trajectory will hinge on multiple factors. Ongoing Middle East uncertainties will provide support, but a stronger U.S. dollar and Federal Reserve policy may cap gains. Over the long term, low interest rates and global economic risks will sustain gold’s appeal, though short-term volatility may intensify, warranting investor caution.
