Gold prices and copper prices both increased as investors bet that the US Federal Reserve (FED) will need to continue to loosen monetary policy to support the economy, while silver prices have broken out strongly.
The US government is preparing to reopen after the longest closure in history, allowing economic reports to be published again something investors believe will reflect the weakness of the economy, which could prompt the Fed to cut interest rates in December.
The market is predicting weak economic data as the US government opens up and begins releasing reports, said Bart Melek, global commodity strategist at TD Securities. That means the Fed is likely to pursue a more loose monetary policy.
The Fed's policy easing often benefits USD-denominated commodities such as copper, while gold and silver non-yielding assets also benefit in a low-interest-rate environment.
Gold has adjusted slightly after surpassing a record of more than 4,380 USD/ounce last month, but still increased by more than 55% since the beginning of the year, towards the strongest annual increase since 1979, thanks to many supporting factors, notably large-scale buying activities by central banks.
Silver prices soared to their highest day since October 17, when the metal set an all-time record of $24.4796 an ounce. The London market has previously experienced a very strong "supply tightening" period, causing silver prices to skyrocket compared to the amount of metals stored in Shanghai and New York. However, this scarcity has somewhat cooled down thanks to record amounts of silver poured into London archives.
In New York, at 3:00 p.m. yesterday, gold prices increased 1.7% to $4,197.43/ounce, while the Bloomberg Dollar spot index remained almost unchanged. Silver prices increased by 4.8%, while platinum and pala both increased by more than 2%.
On the London Metals Exchange (LME), the price of copper increased by 1.1%, to 10,944 USD/ton at the end of the session. Most other metals on the LME increased, except for nickel.
