The "precious metal frenzy" in the global commodity market is continuing this week!
Shortly after the opening of the Asian session on Monday, spot gold further hit a historic high, while silver prices rose above $32 as investors' expectations of the Federal Reserve leading global central bank interest rate cuts continued to rise. The news surrounding the helicopter accident in which the Iranian president was riding also stimulated the safe haven demand in the precious metal market.
Market data shows that spot gold prices reached a peak of $2440.61 per ounce during the day, surpassing the previous intraday record high set in April.
Interest rate market traders have increased their bets in recent trading days that the Federal Reserve may lower interest rates as early as September. The data released last Wednesday showed that the slowdown in the monthly rate of US CPI in April exceeded market expectations, driving the US dollar and US bond yields to fall simultaneously. This scene clearly provides support for interest free asset gold denominated in US dollars.
The latest data from the US Commodity Futures Trading Commission (CFTC) shows that in the week ending May 14th, hedge funds have raised their bullish bets on gold in the Comex gold futures market to a three week high.
Sean Lusk, co head of commercial hedging at Walsh Trading, told Kitco that high inflation, large-scale debt issuance, and uncontrolled central bank printing are driving market participants towards precious metals and other commodities.
Over the weekend, the further emergence of geopolitical risks in the Middle East also boosted the trend of safe haven asset gold.
Market Focus on Helicopter Accident Riding Iranian President
According to Iranian media reports on the 19th, a helicopter carrying Iranian President Lehi and senior officials crashed on the 19th and made an emergency landing in the eastern province of Azerbaijan in northwestern Iran. At present, the situation of the personnel on board is unclear, and search and rescue work is fully underway.
Iranian state television reported that the accident may have occurred in Walzagan County, about 670 kilometers away from the capital Tehran, and the exact location of the helicopter involved in the accident is still unknown. The TV reporter reported on site that the weather is foggy and cold, making rescue work very difficult.
On the early morning of the 20th local time, the Emergency Management Command Center of the Iranian Red Crescent Society issued a relevant announcement regarding the helicopter accident in which Iranian President Lech was riding, revealing the latest search and rescue measures.
The announcement shows that according to the two heat source locations detected by Türkiye's UAV in Taville Village, Iran, the Red Crescent Society rescue team is going to the possible accident site. At present, a total of 73 rescue teams are involved in the search and rescue work of the accident helicopter, of which 23 rescue teams equipped with professional equipment have been dispatched from the capital Tehran and surrounding provinces. The announcement pointed out that the area where the accident occurred was foggy, rainy, with low visibility and harsh environment, and rescue work is still ongoing.
Silver has been rising more recently than gold?
In addition to gold, spot silver prices also reached a new high of $32 per ounce in intraday trading, reaching an 11 year high. Since the beginning of this year, silver prices have soared by 32%, surpassing gold and becoming one of the best performing major commodities this year.
The rise of silver is taking place against the backdrop of a surge in investor interest, an increasingly favorable macroeconomic background, and an expected fourth consecutive year of supply shortages.
Phil Streible, Chief Market Strategist at Blue Line Futures, recently stated in a telephone interview that the current trend of silver is somewhat reminiscent of the resurgence of meme frenzy last week. These speculators naturally seek different fields to utilize. And silver is usually also their preferred field.
It is worth mentioning that although silver has risen more than gold, its price is still relatively cheap in the long run compared to the gold to silver ratio. The recent trends of these two precious metals have been basically consistent, as they both have similar macro and currency hedging properties. With gold hitting a historic high driven by central bank buying, interest in the Chinese retail market, and renewed bets on the upcoming US interest rate cut, silver also rose along the way. Although investors are not very interested in silver backed ETFs, physical sales have rebounded.
Silver has a dual characteristic, serving as both a financial asset and an industrial input, including clean energy technology. This metal is a key component of solar panels, and with the strong growth of the industry, it is expected that the usage of this metal will reach record levels this year, according to data from the Silver Institute. In this context, the market is moving towards the fourth consecutive year of supply shortage, and this year's shortage is being seen as the second largest shortage in history.