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Gold futures headed higher Thursday as tightening supplies for the commodity and worries about the economic impact of the COVID-19 pandemic and rising tensions in the Middle East buoyed bullion.
“In a direct opposite to the glut in the oil market, physical gold is seeing a shortage and so the price on the ‘nearest to deliver’ futures contract is experiencing sporadic $50+ surges in premiums relative to spot,” wrote Albert Edwards, global strategist at Société Générale, in a Thursday research note.
BofA Global Research notes that exchange-traded funds in metals have increased their holdings in silver, viewed as an industrial and precious metal, and gold, which has helped to lift both prices.
“In our view, non-commercial market participants have increased their exposure to silver for the same reason as market participants boosted gold holdings: concerns over ultra-loose monetary policy and rising central bank balance sheets,” wrote analysts Clifton White and Peter Helles at BofA Global.
Gold prices held onto their gains after weekly labor-market data showed another 4.4 million people filed for unemployment benefits for the week ended April 18, bringing the total claims over the past month to 26 million since the coronavirus pandemic laid siege to the U.S. economy.
Gold for June delivery GCM20, +0.52% on Comex was up $9.30, or 0.5%, at $1,747.60 an ounce, after rallying 3%, to settle at the highest price for a most-active contract since April 15, according to FactSet data.
May silver SIK20, +1.76%, meanwhile, picked up 31 cents, or 2%, to reach $15.64 an ounce, after the white metal advanced more than 3% on Wednesday.
For the week thus far, gold is on pace for a gain of about 2%, while silver futures are looking at a more than 3.4% return.
Meanwhile, President Donald Trump on Wednesday in a tweet “instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea,” a move that may also offer some lift to precious metals.
BofA Global predicts that recovering industrial production, coming after the worst of the viral outbreak subsides, could lead to a rise in silver to around $20 an ounce over the next 12 months, buttressed by government and central-bank stimulus efforts to lessen the economic impact of the disease.
“As such, a rebound of economic growth, supported by fiscal stimulus and central banks, could imply that silver will ultimately take off on two engines, having crashed to earth just now,” the analysts wrote.
Exchange-traded SPDR Gold Shares GLD, +1.96% is up about 2% so far this week, while the iShares Silver Trust SLV, +1.51% is off 0.4%.
Among other metals, May copper HGK20, +1.24% tacked on a 3 cents, or 1.2%, to trade at $2.319 a pound, after rising 2.7% on Wednesday. July platinum PLN20, +3.30% rose 3.2% to $790.10 an ounce, after a 0.9% gain in the previous session and June palladium PAM20, +1.33% jumped 1.4% to $1,917.90 an ounce, more than erasing a 0.8% decline a day ago.
