Gold and Silver Prices Surge Despite Economic Uncertainty

19 July, 2023

As at 10am, AEST.

Gold Spot Price $AU2907

Silver Spot Price  $AU36.92

Platinum Spot Price  $AU1461

Gold and silver bullion have shown remarkable resilience, defying their 200-day moving averages (200MDA) and soaring towards their psychological ceilings

(Gold US2000 and Silver $US30) Over the past week, gold experienced a rapid climb from the early $US1900's to around $US1980. This impressive price movement was fuelled by positive economic news from the US, which has also fuelled a surge in the share market. Economists' predictions of strong price gains across various assets were based on the Federal Reserve's pause on interest rate hikes and the potential easing of their tightening policy in the coming months.

While the recent gains in gold and silver are certainly gratifying, there remains a lingering question about whether inflation is genuinely under control. Former Vice President Mike Pence recently asserted that inflation is still around 16%, although his calculation differs significantly from other measures of the Consumer Price Index (CPI). Nonetheless, Pence's remarks touch on a relatable sentiment as consumers increasingly feel the impact of rising costs over the past 29 months, comparing June 2023 to January 2021.

Indeed, many consumers would concur that inflation feels far greater than the standard 3% rate. Escalating prices can be witnessed in various aspects of daily life, from food items at the grocery store, which has risen by 25-35%, to higher auto insurance premiums, rents, repair bills, and utility costs, including water and electricity. Even services like Netflix and internet service providers have seen large percentage price increases.

Despite the bullish gains in the share market, reports on the US economy paint a different picture:

- Retail sales growth for June fell short of predictions (0.5% predicted, 0.2% reported)

- Housing starts experienced a month-on-month drop (1.63M to 1.48M)

- US economic indicators continue to reflect a negative trend (-0.6%)

As investors navigate this complex economic landscape, the performance of precious metals continues to offer a valuable indicator of market sentiment and the potential for stability during times of uncertainty.

Gold daily, with 200MDA

Silver daily, with 200MDA